The US has resumed enforcing a naval blockade targeting Iran’s southern ports following a military escalation in the Strait of Hormuz. The blockade, which began in mid-April and lasted nine weeks, was lifted in June under a memorandum of understanding.
Under the agreement, Iran had begun exporting tens of millions of barrels of oil that it had been holding aboard supertankers. However, following recent attacks over control of the Strait of Hormuz, Washington revoked oil and banking waivers and prevented Iran-linked vessels from returning to port to load oil.
US Central Command (CENTCOM) redirected several vessels operating in the Strait of Hormuz and carried out a strike to neutralize the Curaçao-flagged supertanker Belma, which was allegedly carrying Iranian crude oil during the war. Iran has also been accused of attacking vessels in the strait, prompting the US to bomb Iran’s coastal areas.
Oil exports fall to zero
Iranian Parliament Speaker and chief negotiator Mohammad Bagher Ghalibaf said in a television interview at the end of June that Iran had been unable to export “even a single barrel of oil” during the previous blockade. Energy analyst Hamidreza Shokouhi told Al Jazeera that the new blockade would remove at least 1.5 million barrels of Iran’s daily oil exports from the market. He said this had pushed oil prices to around $90 a barrel and warned that prices could rise further if the conflict continued.
“This means additional pressure on global strategic reserves, which have already been used during the war,” Shokouhi said. According to the analyst, Washington’s insistence during the agreement that vessels use the southern route of the Strait of Hormuz, close to the Omani coast, contributed to the current military escalation.
Iran makes a counter move
Shokouhi said Iran had responded to the blockade by seeking to prevent other countries in the region from exporting oil through the strait, thereby putting pressure on the US and its allies. “When the US acts this way, Iran also moves toward not prioritizing the economy and using the leverage it has,” he said.
Military infrastructure targeted
Reciprocal attacks between the US and Iran have escalated rapidly over seven nights. In addition to Iran, Kuwait and Bahrain were also targeted by Iranian missiles and unmanned aerial vehicles. The US military heavily struck provinces across Iran, particularly the southern areas near the strait.
Military facilities, as well as civilian infrastructure such as bridges, tunnels, ports, power plants and water facilities, were systematically targeted. Some experts suggested that the attacks could be preparations for a ground invasion of Iran’s coastal areas.
After the fighting flared up again, US forces struck the Ak-Tekeh railway bridge in Iran’s northern Golestan Province last week. Although Iranian officials said the damage was quickly repaired, the attack revealed Washington’s intention to target import and export routes to increase the impact of its naval blockade. Ak-Tekeh lies on the railway line connecting Iran with Turkmenistan, Russia and China and is critically important for transporting goods such as food and iron ore.
Economy suffers a severe blow
The previous blockade had made daily life more difficult for more than 90 million Iranians. Although there were no widespread shortages of basic foodstuffs, inflation, already among the highest in the world, rose further. The prices of products such as eggs, chicken and cooking oil tripled compared with a year earlier.
Borzou, who trades industrial motors and equipment at Tehran’s Grand Bazaar, told Al Jazeera: “Our sales are very erratic. The market is struggling to find prices, and there is a great deal of instability and uncertainty about the future.” Borzou added that most distributors were still using their previous import stocks, but that most of these goods came through China and the UAE and could not all be imported by land.
Rial falls to historic low
The renewed military escalation and blockade also placed intense pressure on Iran’s rial. The rial traded above 1.93 million on Tehran’s free market on Saturday, the first day of the Iranian week, falling to an all-time low. The Tehran Stock Exchange also continued its downward trend last week, with the main index losing another 120,000 points, or 2.4 percent, on Saturday to fall to 4.77 million.
Iran’s armed forces warned that they would retaliate against US attacks on civilian infrastructure by striking similar targets in regional countries hosting US bases. “Let us not forget that the US and Israel began the infrastructure attacks by striking the South Pars gas fields, oil depots in Tehran and petrochemical facilities in Mahshahr,” energy analyst Shokouhi said.
Shokouhi said that, with the help of the Houthis in Yemen, Iran could significantly disrupt maritime traffic in the Bab el-Mandeb Strait if US President Donald Trump carried out his threat to strike more civilian infrastructure, such as power plants and bridges. “Trump’s actions in recent months, and especially in recent days, have made the situation even more intractable and rendered the outlook more uncertain. The current situation cannot continue for long, but it is expanding the scope of the conflict, and that is concerning,” he added.
