Can Iran really block the Strait of Hormuz?

Investing.com - Iran claims to have blocked the Strait of Hormuz, one of the world’s most critical oil passages. This move has heightened global concern, but analysts say Tehran may lack the capability to enforce such a blockade.

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In a report on Monday, Bank of America analyst Kalei Akamine stated that Iran’s stance has shifted from “ambiguous to resolutely blocking,” after previously saying it had “no intention of closing the strait.”

However, Akamine noted that experts are increasingly questioning Iran’s combat capabilities, emphasizing that its missile stockpile is estimated at 2,000 to 3,000 missiles, which has been severely depleted.

According to Akamine, U.S.-Israel strikes may have destroyed about 50% of Iran’s weapons stockpile, and the Iranian military has launched approximately 750 missiles.

Akamine wrote that the increasing intervals between missile salvos and the rising use of drones indicate “a tactical effort to conserve ammunition.”

“The weakening of naval forces is also noteworthy—nine Iranian naval vessels have been sunk, reducing Iran’s ability to enforce any maritime blockade,” Akamine said. “The report also shows that communications have been disrupted—evidence of this can be seen in the longer pauses between missile salvos and inconsistent explanations for attacks on Gulf countries.”

Akamine pointed out that crude oil prices have risen 7%, exploration and production stocks have increased about 4%, and added that this “moderate price movement suggests the market is leaning toward the conclusion that the conflict will be short-lived.”

The analyst warned that if tensions persist beyond this week, markets may begin to “substantially reprice oil and stocks higher.”

However, risks do exist. Morgan Stanley analyst Martijn Rats stated that only two oil tankers passed through the strait on Monday, compared to about 35 normally, and freight rates on key routes from the Middle East to China have “nearly doubled.”

Infrastructure impacts are also beginning to show, including Qatar Energy suspending LNG production after facilities were attacked, and Saudi Aramco’s Ras Tanura refinery partially halting operations.

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