Iran closes the Strait of Hormuz: Islamabad's memorandum violated, markets in shock
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 completely nullifies the fragile truce reached just a few days ago and once again puts global energy supply chains at risk. Markets, which had already begun pricing in de-escalation, now face a sharp return of geopolitical risk.
Command Statement and Background of the Conflict
The Iranian command described the closure of the strait as a "first step" and threatened further measures if aggression continues. All major Iranian state media reported the decision, and official statements have already appeared online.
As a reminder, the conflict escalated after strikes by the United States and Israel in late February 2026, which led to earlier restrictions on passage through the strait. However, on June 17, the 14-point Islamabad Memorandum was agreed upon, stipulating that Iran would make maximum efforts to ensure the safe and free passage of commercial vessels during the first 60 days. In return, the U.S. was to lift the naval blockade of Iranian ports.
Ship traffic had already begun to recover, contributing to a decline in energy prices. However, Tehran's new statement effectively cancels this agreement. Iran views Israel's ongoing actions in Lebanon as a direct violation of the memorandum.
Energy Time Bomb
Approximately 21 million barrels of oil and oil products are transported through the Strait of Hormuz daily — roughly 20% of global liquid hydrocarbon consumption and a quarter of all seaborne oil trade. In addition to oil, major export shipments of liquefied natural gas from Qatar and the UAE pass through the strait.
There are virtually no alternative routes for Gulf countries. Any blockade of this corridor is a direct blow to global supply, inevitably leading to a sharp spike in volatility in oil and gas markets.
Previously, the memorandum had quickly lowered oil prices, but the current escalation once again draws attention to the prospect of a long-term supply shock. There is no official confirmation of the strait's closure from the U.S. side yet — Vice President JD Vance has indicated the opposite — but Tehran's statements appear more than decisive.
Expert opinion: The market has once again fallen into the trap of a false sense of security. The closure of the Strait of Hormuz is not just a geopolitical gesture but a direct threat to global energy security. Traders and investors should prepare for a period of heightened turbulence, where any movement in the region could trigger sharp price swings. Cryptocurrencies, as assets sensitive to the macroeconomic backdrop, may also feel the pressure of a flight from risk.