Iran blocks the Strait of Hormuz: ceasefire collapses, markets in shock
On June 20, 2026, the "Khatam al-Anbiya" Central Command—Iran's highest joint headquarters—officially announced the closure of the Strait of Hormuz to shipping. The reason cited was violations of the Islamabad Memorandum by the United States and Israel. This decision unilaterally dismantles the fragile truce reached just a few days ago and once again threatens global energy flows.
First Step or the Beginning of Escalation?
The Iranian command described the blockade as a "first step" and warned of further measures if "aggression" continues. The conflict escalated after US and Israeli strikes in late February 2026, which led to earlier restrictions on passage through the strait. Now, Tehran has moved from warnings to actions, completely shutting down one of the key arteries of global trade.
Approximately 21 million barrels of oil and petroleum products are transported daily through the Strait of Hormuz—roughly 20% of global liquid hydrocarbon consumption and a quarter of all seaborne oil trade. Additionally, major export shipments of liquefied natural gas from Qatar and the UAE pass through the strait. Any disruptions in this region have historically amplified price volatility, as alternative routes for Gulf countries are virtually nonexistent.
The Islamabad Memorandum: Signed but Not Implemented
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 during the first 60 days. The plan also called for the US to lift the naval blockade of Iranian ports. Ship traffic began to recover after this agreement was reached, helping to lower energy prices.
However, the new statement from the Iranian military effectively nullifies these achievements. Tehran views Israel's ongoing actions in Lebanon as a violation of the memorandum. The agreement previously led to a rapid decline in oil prices, but the current situation once again draws attention to supply issues amid the potential for a prolonged supply shock.
It is worth noting that there has been no official confirmation of the strait's closure from the US—Vice President JD Vance has indicated the opposite. Nevertheless, the mere fact of the Iranian military's statement has already created a powerful information backdrop that markets will react to in the coming hours.
My analysis: Markets underestimated the risks of escalation following the signing of the memorandum. If the blockade is confirmed, we will see a sharp spike in oil prices above $100 per barrel and increased volatility across all risky assets, including cryptocurrencies. Investors should prepare for a period of high uncertainty.