Here are six major issues the market is concerned about regarding the US military's blockade of the Strait of Hormuz.

The US blockade of the Strait of Hormuz has pushed the global energy landscape to a new critical point.

According to Xinhua News Agency, on April 12th, Trump announced that the US Navy would immediately blockade all vessels entering and exiting the Strait of Hormuz, and the US military officially began enforcement on April 13th. This action occurred just hours after US-Iran negotiations in Islamabad broke down, directly jeopardizing the fragile ceasefire agreement reached by both sides on April 7th. The Islamic Revolutionary Guard Corps of Iran immediately warned that any military ships approaching the strait under any pretext would be considered a violation of the ceasefire agreement, and threatened that if Iran’s ports were threatened, it would strike all ports in the Persian Gulf and the Sea of Oman.

Oil prices surged in response as the market priced in further supply shortages. If the blockade is effectively enforced, it will not only cut off Iran’s oil export lifeline, but also increase pressure on Asian countries that are heavily dependent on Middle Eastern energy. Here are the six core questions investors are most concerned about.

1. What exactly is the US Navy doing?

On April 12th, US-Iran permanent ceasefire talks in Islamabad collapsed. According to CCTV International News, hours later, Trump posted on social media that “effective immediately,” the US Navy would blockade “all ships attempting to enter or exit the Strait of Hormuz,” and said other countries would also participate, though he did not name them. He also threatened to “intercept all ships in international waters paying transit fees to Iran,” implying the scope of the blockade could extend far beyond the strait itself, even to the Sea of Oman.

Compared to Trump’s rhetoric, the official US military stance is slightly narrower. The military set the blockade start time for 10:00 a.m. New York time on April 13th, with the scope applying to all ships entering or exiting Iranian ports and coastal areas. Neutral ships that have not docked in Iran will not be obstructed, but may be subject to inspections for contraband. The US military advised crews to closely monitor official announcements and proactively contact the US Navy when operating in the Sea of Oman and approaching the Strait of Hormuz.

On April 13th, the US military issued a notice to ship operators stating that they would intercept, drive away, or detain ships leaving Iran. What remains unclear is whether the US is willing to dispatch its vessels deep into the Indian Ocean to pursue oil tankers, and how both sides will respond in the event of confrontation or damage to tankers.

2. How does Iran respond?

According to CCTV News, after the US threatened to begin blocking any ships from entering or exiting the Strait of Hormuz, the Islamic Revolutionary Guard Corps of Iran declared that any military ships approaching the strait under any pretext would be considered a violation of the ceasefire agreement. Iran also warned that if its shipping hubs were threatened, it would launch attacks on all ports in the Persian Gulf and Sea of Oman.

John Bradford, former US naval officer and co-founder of the Yokosuka Asia-Pacific Research Committee, said: “This round of escalation is more likely to trigger more confrontation than push for reconciliation.”

3. Why is the US taking this action?

Since US and Israeli strikes on Iran on February 28th, Tehran has tightened its control over the Strait of Hormuz, reducing the number of vessels passing through daily from about 135 in peacetime to single digits, nearly paralyzing this critical choke point.

This asymmetric tactic proved quite challenging for the US—Iran successfully blocked the passage of other countries’ ships while maintaining its own oil exports, thereby boosting global oil prices and preserving its export income.

The ultimate goal of the blockade is to cut off Iran’s oil exports, severing its regime’s key financial lifeline.

The Trump administration has previously implemented this strategy in Venezuela, crushing the nation’s economy with blockades and sanctions. However, Venezuela is much smaller than Iran, its fleet is limited, and its strategic significance to global oil exports pales in comparison to Iran.

4. What does this mean for Iran?

If the blockade is effectively enforced, it would deal a heavy blow to Iran, which is highly dependent on oil exports.

Over the past few weeks, Iran has benefited from high oil prices—latest data shows Iran’s oil revenue surged 37% in March. Previously discounted crude was sold at a premium earlier this month, in part because the US, to increase supply, granted exemptions allowing buyers to purchase previously sanctioned Iranian crude.

For Iran, which is reeling from US-Israeli air strikes and urgently needs to rebuild its economy, higher per barrel prices are crucial. Since the outbreak of war, these extra gains have already reached hundreds of millions of dollars. Once the blockade is enacted, this windfall may come to an abrupt halt.

5. What does this mean for the US?

Trump often links Middle Eastern supply disruptions to the outlook for US oil and gas exports, calling the crisis a strategic opportunity for America, now a top oil-producing nation. According to CCTV International News, Trump said on Monday that many oil tankers are heading to the US, loading oil to export globally, and “these ships don’t even need to go through the Strait of Hormuz.”

However, US crude is not a perfect replacement for Middle Eastern grades, and for US consumers, the soaring benchmark price is already pushing up inflation.

Iran is clearly aware that it may be more resilient than the US in bearing economic pressure. Oil prices surged immediately after news of the blockade, and investors are preparing for potential supply shortages.

6. What does this mean for Asian countries?

Asia is the biggest victim of this round of energy crisis, and further restrictions on flows through the Strait of Hormuz will make the region’s situation even more dire. Just before the blockade was announced, the number of vessels passing through had already dropped significantly.

The US exemptions that previously allowed purchases of sanctioned Iranian crude now appear void due to the blockade, with maneuvering space suddenly narrowed. Countries that had bilateral agreements with Iran may now be forced to limit purchases out of concern for direct conflict with the US.

The South Korean President Lee Jae-myung previously issued a statement urging all Koreans to “save every drop of fuel,” and proposed a $17 billion emergency relief plan to ease the impact of fuel price shocks on Korean households and businesses. Meanwhile, India, Australia, and other economies highly dependent on Gulf energy supplies have also taken emergency measures.

Jorge Montepeque, managing director of Onyx Capital Group, said bluntly in a Bloomberg TV interview: “They're so focused on Iran that they can't see what they're doing to the whole world. Pain is in Asia, pain is in the South Pacific, pain is in all oil-dependent countries.”

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