Strait of Hormuz Closure Threat: Surging Oil Prices and Intensified Global Economic Instability

Iran's threat to close the Strait of Hormuz is immediately pressuring international oil prices and foreshadowing significant repercussions for the global economy. The convergence of heightened geopolitical tensions and supply chain instability is increasing the potential for renewed inflation and recession, prompting investors to favor safe-haven assets. According to analysis from FireMarkets, this situation could expand volatility in the short term and accelerate structural changes in the energy market in the long term.

The Background and Feasibility of the Strait of Hormuz Closure Threat

Geopolitical Tensions and Iran's Strategic Intentions

Iran's threat to close the Strait of Hormuz is not new. However, recent statements have been more specific and resolute, amplifying market concerns. Iran suggests the possibility of closing the Strait of Hormuz, driven by its opposition to international sanctions related to its nuclear program and its strategic intent to expand its influence in the region. According to Mae Kyung, Iran has already reinforced its naval power around the Strait and is prepared to respond swiftly in the event of a closure.

Technical and Economic Reality of a Closure

The Strait of Hormuz is a strategic chokepoint through which approximately 20% of the world's oil supply passes. If the Strait were to be closed, a surge in oil prices would be inevitable, and the global economy would suffer severe consequences. However, a complete closure is not technically easy. The U.S. and other international naval forces are stationed around the Strait, and an immediate response to any Iranian attempt to close it is expected. Nevertheless, a partial closure or attacks on maritime transport could occur, expanding oil price volatility and exacerbating supply chain instability.

Impact on Oil Prices and the Global Economy

Oil Price Increase Scenarios and Outlook

Iran's threat to close the Strait of Hormuz is already putting upward pressure on oil prices. If the Strait were actually closed, oil prices are likely to exceed $100 in the short term. Rising oil prices could rekindle inflation and influence the direction of monetary policy in each country's central bank. In particular, the possibility of stagflation, where high inflation and economic recession occur simultaneously, is increasing.

Vulnerability of the Global Economy and Response Measures

The global economy is already vulnerable due to various factors such as high debt levels, supply chain instability, and geopolitical risks. Rising oil prices could exacerbate these vulnerabilities and accelerate a recession. Each government must strengthen energy security, invest in the development of alternative energy sources, and respond to the crisis through international cooperation. Investors should also strengthen their preference for safe-haven assets and adjust their portfolios to manage risk.

Investment Strategy and Implications

Strengthened Preference for Safe-Haven Assets

As geopolitical risks escalate, investors strengthen their preference for safe-haven assets. Demand for safe-haven assets such as gold, the dollar, and government bonds increases, while investment in risky assets such as stocks and commodities may shrink. Investors should consider reducing the risk level of their portfolios and increasing the proportion of safe-haven assets.

Accelerated Structural Changes in the Energy Market

Iran's threat to close the Strait of Hormuz could accelerate structural changes in the energy market. Each country will more actively invest in the development of alternative energy sources and promote policies to improve energy efficiency in order to increase energy independence. Efforts to diversify energy supply chains to reduce reliance on specific regions will also be strengthened.