Whenever tensions in the Middle East flare up, one of the first things that comes to mind is the 1973 oil embargo. Back then, all Arab members of OAPEC, along with Egypt and Syria, announced that they would stop supplying oil to countries that supported Israel during the Yom Kippur War.

Now, with the Iran-Israel missile exchange, the primary concern in the media coverage is again how much the oil market might suffer. But this time, the fear is slightly different: instead of an export embargo, Tehran could try to blockade the Persian Gulf, perhaps by laying mines. 

To put it in context, around 20 million barrels of oil and oil products pass through the Strait of Hormuz every day—about a fifth of the world’s supply. Therefore, if tensions escalate and Iran mines the strait, energy prices could skyrocket, causing global inflation to rise and, consequently, the S&P 500 to fall.

The good news is that the scenario is unlikely. Much of the oil flowing through the strait heads to China, a supporter of Iran, and neutral countries like India. Blocking the passage would mainly hurt allies and neutral partners, not Israel or its key backer, the United States.

Furthermore, such a move would backfire on Iran itself. Its major ports are in the Gulf, so closing the strait would cut off crucial export revenues. And let’s not forget: a global oil crisis could drag the U.S. into direct military involvement. Gulf states would likely step up, siding more openly with the U.S. 

In short, although Iran could disrupt maritime traffic through the Strait of Hormuz, the chances of that happening are slim. The markets seem to agree: oil, together with gold (XAUUSD) and the dollar – both considered safe havens and risk-off benefactors – have already begun to retreat.

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