If Iran ever really closed off the Strait of Hormuz—as it threatened to last week—oil prices could spike more than 50% in a matter of days, analysts tell the New York Times, with even a partial closure likely resulting in a $50-per-barrel increase. “You would get an international reaction that would not only be high, but irrationally high,” says the head of one energy think tank.
Iran’s military is definitely capable of blocking off the vital oil chokepoint. But it couldn’t hold Hormuz for very long, according to Peter Apps, Reuters’ political risk correspondent—the US and others would quickly launch a military strike to clear it. The blockade would also take a heavy toll on China, Iran’s top oil customer and one of its closest allies. “They are much more likely to threaten than to act,” concludes one national security professor. (Read more Iran stories.)