Iran has de facto closed the Strait of Hormuz: the fragile ceasefire collapsed on the very first day
June 20, 2026, became the day when geopolitical tensions in the Middle East once again rocked energy markets. The "Khatam al-Anbiya" Central Command—Iran's highest joint headquarters—officially announced the closure of the Strait of Hormuz to shipping. According to the military, the reason is systematic violations of the Islamabad Memorandum by the United States and Israel.
This decision completely dashes the hopes for de-escalation that emerged just a few days ago after the signing of the 14-point memorandum. Markets had already begun pricing in a lower risk premium, but now we are witnessing a sharp reversal. The closure of the strait is not just a political demonstration but a direct blow to global energy supply chains.
Strategic Hub of the Global Economy Under Threat
Approximately 21 million barrels of oil and petroleum products pass through the Strait of Hormuz daily—about 20% of global liquid hydrocarbon consumption and a quarter of all seaborne oil trade, according to the U.S. Energy Information Administration. Additionally, major exports of liquefied natural gas from Qatar and the UAE transit through the strait. Gulf countries have virtually no alternative routes, making any disruption in this region a catalyst for price volatility.
The Islamabad Memorandum: A Hope That Fell Short
The 14-point memorandum, agreed upon around June 17, 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 U.S. to lift its naval blockade of Iranian ports. Ship traffic had indeed begun to recover, temporarily helping to lower energy prices.
However, the new statement from the Iranian command effectively nullifies these agreements. Tehran views the ongoing actions of Israel in Lebanon and U.S. violations as a direct breach of the memorandum. The closure of the strait has been described as a "first step," with the military warning of further measures if the "aggression" continues.
Market Reaction and U.S. Position
Earlier, the memorandum quickly led to a drop in oil prices, but the current situation once again draws attention to the risk of a long-term supply shock. Notably, U.S. Vice President JD Vance has already issued a rebuttal, pointing to the opposite and emphasizing a long-term strategy to neutralize Iran's nuclear ambitions. However, as of now, there is no official confirmation or denial from the U.S. side regarding the closure of the strait, creating an information vacuum and heightening market nervousness.
My expert assessment: We are entering a phase where geopolitical risk ceases to be a "factor of uncertainty" and becomes the dominant driver of pricing. If the closure of the strait lasts more than a few days, we will see a sharp spike in oil prices above levels that markets had not factored in even in the bleakest scenarios. Investors should prepare for high volatility and a reassessment of risk models.