Closure of Strait of Hormuz could disrupt global economy

The Strait of Hormuz, the world's most critical oil shipping chokepoint, is once again at the center of escalating global tensions after Iran's parliamentary vote on Sunday authorizing its potential closure following the United States' direct airstrikes on its nuclear sites.

According to Iran's state media, the symbolic but politically charged vote empowers the Supreme National Security Council to implement the measure. While the decision does not require immediate action, analysts said it signals Teheran's intent to retaliate after what it has called a "blatant act of aggression" by Washington.

Iran's move aims to leverage its remaining strategic levers to send a deterrent message and seek a stronger position in future negotiations with the US and efforts to end the ongoing conflict, said Chen Zhaoyuan, a senior research fellow at the Institute of World Economics and Politics at the Chinese Academy of Social Sciences.

"This symbolic deterrence has had an adverse impact on global economic expectations. The decline in navigation capacity in the strait is likely to raise oil prices and shipping industry costs in the short term, disrupt the global supply chain and intensify fluctuations in the international financial market," he said, adding that an attempt to close the strait would be Iran's last option.

Goldman Sachs on Monday warned of energy supply risks as Middle East tensions threaten the Strait of Hormuz, which could potentially spike oil and gas prices. It estimated that Brent crude could briefly hit $110 per barrel if oil flows through the critical waterway were halved for a month.

Economists at Oxford Economics earlier warned that a "worst-case scenario" could see oil prices surge to $130 a barrel, reducing global GDP by 0.8 percentage.

As the world watches Iran's final decision on closing the vital strait, through which 20 percent of daily global oil consumption passes, experts warn that soaring oil prices could prompt the European Central Bank to tighten its policies, further exacerbating the economic recession.

Fears of retaliation by Iran have already sparked fears about disruptions to commercial shipping in the region. Vessel owners and traders are closely monitoring any signs that the escalation in the Middle East will affect vessel movements and oil flows.

Following the US airstrikes on Iran, two supertankers, each capable of carrying around 2 million barrels of crude oil, made a U-turn in the Strait of Hormuz, Bloomberg reported on Monday.

The Coswisdom Lake and South Loyalty both entered the waterway and abruptly changed course on Sunday, according to vessel tracking data compiled by Bloomberg. The two empty freighters then sailed south, away from the mouth of the Persian Gulf.

Earlier on Sunday, Greece's Shipping Ministry issued a notification advising its ships to reassess movements through Hormuz and to instead shelter in safe ports until the situation stabilizes.

Agencies contributed to this story.