Partial closure of the Strait of Hormuz for several hours raises supply concerns

⑴ According to Iran's semi-official Fars News Agency on Tuesday, due to naval exercises conducted by the Islamic Revolutionary Guard Corps in the Strait of Hormuz, certain sections of the strait will be closed for several hours on Tuesday as a "precautionary measure" for shipping safety. ⑵ The Strait of Hormuz is the world's most critical oil transportation chokepoint, connecting major Gulf oil-producing countries such as Saudi Arabia, Iran, Iraq, and the UAE with the Gulf of Oman and the Arabian Sea. About one-fifth of the world's daily oil supply passes through this route to destinations around the globe. ⑶ This temporary closure comes at a geopolitically sensitive time. The day before, Iran had conducted live-fire military exercises in the same waters, and US and Iranian officials are scheduled to hold talks in Geneva later on Tuesday. The market is closely watching the exercises and the closure of the shipping lane for their potential impact on crude oil supply. ⑷ Although the closure is only temporary for several hours, the news has nonetheless heightened market concerns over the security of oil transportation routes. Oil prices, which had been under pressure due to expectations of US-Iran talks, may find support as geopolitical tensions rise again.