As tensions surge following Israeli strikes on Iran, fears have resurfaced that the Tehran could retaliate by targeting one of the world’s most vital oil arteries — the Strait of Hormuz. 

The Strait of Hormuz, which connects the Persian Gulf to the Arabian Sea, sees roughly 20 million barrels per day of oil and oil products pass through, accounting for nearly one-fifth of global oil shipments. Any move to block it would ripple through energy markets.

However, market watchers believe a full-scale disruption of global oil flows by closing the waterway is unlikely, and might even be physically impossible.

There really is “no net benefit” that comes with impeding the passage of oil through the Strait of Hormuz, especially given how Iranian oil infrastructure has not been directly targeted, said Ellen Wald, President of Transversal Consulting. She added that any such action would likely trigger further retaliation.

She also warned that any major spike in oil prices caused by a closure could draw backlash from Iran’s largest oil customer: China.

“China does not want the flow of oil out of the Persian Gulf to be disrupted in any way, and China does not want the price of oil to rise. So they’re going to bring the full weight of their economic power to bear on Iran,” Wald explained.

China is the number one importer of Iranian oil, reportedly accounting for over three-quarters of its oil exports. The world’s second-largest economy is also Iran’s largest trade partner.

“Their friends will suffer more than their enemies … So it’s very hard to see that happening,” said Anas Alhajji, managing partner at Energy Outlook Advisors, adding that disrupting the channel could be more of a bane than a boon for Tehran, given how most of Iran’s daily consumption goods come via that route.

“It’s not in their interest to cause problems because they will suffer first.”

Iran in 2018 threatened to shut the Strait of Hormuz when tensions spiked following the U.S. withdrawal from the nuclear deal and the reimposition of sanctions. Prior to that, another major threat reportedly came in 2011 and 2012, when Iranian officials, including then–Vice President Mohammad-Reza Rahimi, warned of a potential closure if the West slapped further sanctions on its oil exports over its nuclear program.

The Strait of Hormuz, which is 35 to 60 miles (55 to 95 kilometers) wide, connects the Persian Gulf and the Arabian Sea.

The idea of shutting the Hormuz waterway has been a recurring rhetorical tool but never been acted upon, with analysts saying that it’s simply not possible.

“Let’s be real about the Strait of Hormuz. First of all, most of it is in Oman, not in Iran. Number two, it’s wide enough that the Iranians cannot close it,” said Alhajji.

Similarly, Transversal Consulting’s Wald noted that although many ships pass through Iranian waters, vessels can still traverse alternative routes via the United Arab Emirates and Oman.

“Any blockade of the Strait of Hormuz will be a ‘last resort’ option for Iran and likely contingent on a military engagement between U.S. and Iran,” said  Vivek Dhar, Commonwealth Bank of Australia’s director of mining and energy commodities research.

RBC Capital Markets’ Helima Croft suggested that while there could be some disruption, a full-scale blockade was unlikely.

“It is our understanding that it would be extremely difficult for Iran to close the strait for an extended period given the presence of the US Fifth Fleet in Bahrain. Nevertheless, Iran could still launch attacks on tankers and mine the strait to disrupt maritime traffic,” said Croft, head of global commodity strategy and MENA research at RBC.

U.S. President Trump has warned of possible military action if negotiations with Iran over its nuclear program break down, but it is uncertain whether these threats are meant to raise the stakes of U.S.-Iran talks or simply to increase pressure at the negotiating table, said Dhar. 

Israel carried out a wave of airstrikes on Iran early Friday morning local time, claiming the attacks were aimed at facilities linked to Tehran’s nuclear program.

According to Iranian state media, the strikes killed Mohammad Hossein Bagheri, chief of the Iranian Armed Forces, along with Hossein Salami, the commander-in-chief of Iran’s Islamic Revolutionary Guard Corps.

While a closure of the strait remains highly unlikely, the escalating conflict has prompted some to consider even the faint possibility.

“[Closing the strait] is kind of an extreme scenario, although we are in an extreme situation,” said Amena Bakr, head of Middle East and OPEC+ insights at Kpler.

“So that’s why I’m not putting that option completely off the table. We need to consider it.”

Crude futures jumped as much as 13% after Israel launched airstrikes against Iran early Friday. Global benchmark Brent futures were up 6.5% at $73.88 per barrel as of 4.30 p.m. Singapore time, while the U.S. West Texas Intermediate was trading 6.7% higher at $72.57 per barrel.

DUBAI, United Arab Emirates — Iran launched more than 100 drones toward Israeli territory Friday morning after Israel’s overnight missile strike on the country killed at least three of its senior military leaders.

“We can now confirm that the Chief of staff of the Iranian Armed Forces, Commander of the IRGC and the Commander of Iran’s Emergency Command were all eliminated in the Israeli strikes across Iran,” Israel Defense Forces spokesperson Effie Defrin said.

“Iran launched approximately 100 UAVs towards Israeli territory, which we are working to intercept.”

Rocket sirens sounded in northern Jordan as Jordan’s state media reported the country intercepted several Iranian drones in its airspace.

Israel’s attack on Iran, which it said was targeted at nuclear enrichment facilities, came just days before U.S. and Iranian officials were set to attend a sixth round of nuclear deal talks. It was the largest attack on the Islamic Republic since the Iran-Iraq war of the 1980s.

News of the strikes sent oil prices surging as much as 13% before paring gains, with global benchmark Brent crude surpassing $78 a barrel at one point.

Asian and European stocks fell, as investors rushed into safe havens amid fear of a wider war in a region that accounts for one-third of the world’s oil supply. Dow futures were down over 500 points by 8:21 a.m. London time.

Brent crude is currently trading at $72.76 per barrel at 8:23 a.m. in London, up 5%, with U.S. WTI trading at $71.27 per barrel, up 4.6%.

All eyes are now on the next moves by Iran and the United States, particularly whether the U.S. will get involved in this conflict. The U.S. State Department has stated it was not involved in Israel’s overnight strikes on Iran, with Secretary of State Marco Rubio calling the actions unilateral and urging Iran not to target U.S. interests or personnel in the region.

Tehran does not see it that way. Iran’s foreign ministry warned it would hold Washington responsible for the consequences of Israel’s actions.

President Donald Trump is expected to attend a meeting of the National Security Council scheduled for 11 a.m. Eastern Time.

This is a developing story and will be updated shortly.

Investors fled to safe-haven assets Friday after a series of Israeli airstrikes on Iran marked a major escalation of conflict in the region.

The scale of the attack, which Israel said was targeting Iran’s nuclear program, took markets by surprise, pushing up prices of assets thought to offer protection in times of heightened volatility.

“The news has led to significant fears about an escalation and a wider regional conflict,” Deutsche Bank strategists said in a note early Friday. “The effects of the attack have cascaded across global markets, with a strong risk-off move for several asset classes.”

Gold hit an almost two-month high on the news, although pared some gains as the morning progressed. Spot prices of the metal were up 1.1% at $3,420.24 at 7:42 a.m. London time. Gold futures for August delivery were 1.3% higher at $3.446.

U.S. Treasury prices also rose, pushing yields lower. Yields on the 30-year, 10-year and 2-year Treasury notes were all down around 3 basis points.

European stocks are poised to open sharply lower, meanwhile, with U.S. stock futures also falling.

Investors flee to safe-haven assets during times of uncertainty to protect their money from volatility and find stability when risk assets tumble.

Israel Prime Minister Benjamin Netanyahu said his country had launched a “targeted military operation” against Iran’s nuclear and ballistic missile program. Iran said it launched around 100 drones targeting Israel in retaliation.

“This operation will continue for as many days as it takes to remove this threat,” Netanyahu added.

U.S. Secretary of State Marco Rubio said the attack on Israel was “unilateral” and made without U.S. support. “We are not involved in strikes against Iran and our top priority is protecting American forces in the region,” Rubio said in a statement.

In currencies, the U.S. dollar, Swiss franc and Japanese yen — all considered safe havens — rose.

After a tricky few months following policy uncertainty sparked by the Trump administration, the U.S. dollar index, which measures the greenback against a basket of major peers, was 0.36% higher.

The Swiss franc and Japanese yen both climbed against the dollar earlier Friday, but were broadly unchanged by 6:50 a.m. London time.

Crude futures jumped as much as 13% following the airstrike, setting them on course for their largest single-day gains since 2020.

U.S. West Texas Intermediate was trading 7% higher at 7:48 a.m. London time at $72.76 per barrel, while global benchmark Brent surged 6.8% to $74.04 per barrel, both off earlier highs.

“Looking forward, the focus is now shifting to what form Iran’s retaliation might take. It’s also unclear whether talks between the US and Iran over their nuclear programme will continue,” the Deutsche Bank strategists added.