Iran's recent attacks on commercial shipping in the Strait of Hormuz have caused a sharp rise in oil prices, underscoring Tehran's ongoing ability to disrupt global energy markets. However, experts suggest that Iran's capacity to use this strategic waterway as economic leverage against the US may be diminishing.

Vice President JD Vance, speaking on "The Michael Knowles Show" podcast on June 30, highlighted a US memorandum of understanding (MoU) aimed at replenishing global oil supplies and stockpiles, stating, "I think what the president has told us to do is use this MoU to sort of refill the world's oil economy, to refill some stocks, and then to see where the hand is."

This strategy was tested recently as Iran renewed attacks on commercial shipping. Despite the immediate price shocks, the Energy Information Administration (EIA) forecasts that worldwide crude production and trade flows will rebound to near pre-conflict levels by the end of 2026, with most previously shut-in production returning in early 2027.

Experts note that growing oil production, alternative export routes, and new shipping patterns are steadily weakening Iran's ability to weaponize the Strait of Hormuz. One analysis pointed out that the Islamic Revolutionary Guard Corps (IRGC) has been attempting to make the Strait commercially unworkable, but alternative southern routes create pathways that Iran cannot control or toll.

Commenting on the attacks, an expert said, "These attacks on shipping to me aren't random. They're strategy."

While oil prices climbed amid fears of broader conflict, the EIA's outlook suggests that additional supply is expected to continue reaching global markets unless the fighting escalates into sustained disruption.

Sources