(1/2) What Happens If Iran Closes the Strait of Hormuz? ⸻ Strategic Context: The Strait of Hormuz is the most critical maritime chokepoint in the world. Roughly 20% of globally traded crude oil and 30% of global LNG shipments transit its narrow waters daily. If Iran were to close or significantly disrupt the Strait via mining, anti ship missiles, drone swarms, or fast-attack naval craft it would initiate not just a regional crisis, but a systemic shock to the global economy, supply chains, and security architecture. ⸻ First-Order Effects (Immediate – Week 1) Energy Spike: Crude oil could surge $30–$60 in days. Brent could reach $130–$150 depending on the perceived duration of disruption. Natural gas, especially LNG bound for Asia, would become acutely scarce. Expect JKM LNG benchmarks in Japan and Korea to spike. Markets Rattle: U.S. Treasuries initially bid on safety, but duration risk quickly re-emerges as inflation expectations surge. Equities fall across the board, led by energy-sensitive sectors. VIX jumps above 25–30, with MOVE rising in tandem. The dollar may rally on safe-haven flows short term, but this masks structural fractures beneath the surface. Naval and Kinetic Escalation: The U.S. Fifth Fleet, based in Bahrain, would mobilize rapidly. Mine clearing, naval escorts, and possibly kinetic strikes against Iranian coastal positions would follow. Israel may act preemptively in Lebanon or Syria, fearing regional encirclement. ⸻ Second-Order Effects (Week 2–4) Global Trade Shocks: Energy shipping is rerouted around the Cape of Good Hope, increasing cost and delivery time. Marine insurance premiums soar. Container shipping prices spike again, particularly to Europe and Asia. Expect secondary port congestion and cascading logistical delays. Macro Repricing: Central banks in energy-importing countries (India, Japan, EU) begin defensive FX interventions and emergency energy procurement. Expect drawdowns in reserves, sovereign wealth reallocation, and possible covert bilateral deals with Gulf producers. Supply Chain Strain: Fertilizer prices climb due to natural gas shortages. Food commodities spike especially wheat and soybeans. Nations reliant on subsidized energy (Pakistan, Egypt, Indonesia) face currency stress and domestic instability.