Iran blocks the Strait of Hormuz: fragile ceasefire collapses
June 20, 2026 — The Khatam al-Anbiya Central Command, Iran's highest joint headquarters, has officially announced the closure of the Strait of Hormuz to shipping. The reason cited is violations of the Islamabad Memorandum by the United States and Israel.
This decision is a direct blow to recent diplomatic efforts that had already begun to reduce tensions in the Middle East. Markets, which had priced in expectations of de-escalation, now face renewed risks to global energy transit.
Statement from the Military Command
The Iranian General Staff described the closure of the strait as a "first step" and warned of further measures if "aggression" continues. This statement comes amid a conflict that erupted following strikes by the United States and Israel in late February 2026, and the subsequent early restrictions on vessel passage.
Approximately 21 million barrels of oil and petroleum products are transported through the Strait of Hormuz daily — roughly 20% of global consumption and a quarter of all maritime trade in "black gold." This data is provided by the U.S. Energy Information Administration. In addition to oil, major export shipments of liquefied natural gas from Qatar and the UAE pass through the strait. Historically, any disruptions in this region have intensified price volatility, as alternative routes for Persian Gulf countries are virtually nonexistent.
Disagreements over the Islamabad Memorandum
The 14-point Islamabad Memorandum, agreed upon around June 17, 2026, stipulated that Iran would make maximum efforts to ensure the safe and free passage of commercial vessels for the first 60 days. The plan also called for the U.S. to lift its naval blockade of Iranian ports. Vessel traffic began to recover after this agreement was reached, helping to lower energy prices.
The new statement from the Iranian army effectively nullifies this agreement. Tehran views Israel's ongoing actions in Lebanon as a violation of the memorandum. The agreement had quickly led to lower oil prices, but the current situation once again draws attention to supply issues amid a potential prolonged supply shock.
However, there is no official confirmation of the strait's closure yet — U.S. Vice President JD Vance suggests otherwise, adding uncertainty to the markets.
My analysis: The oil market, which had just begun to calm down after the signing of the memorandum, is now once again teetering on the edge. If the closure of the Strait of Hormuz is confirmed, we could see a sharp spike in commodity prices, putting pressure on global inflation and, consequently, on risky assets, including cryptocurrencies. Investors should prepare for a period of heightened volatility.