US eyes indefinite Iran naval blockade as oil supply shortfall deepens

[PANAMA CITY] The United States on Thursday (Aug 13) threatened to maintain a naval blockade of Iran indefinitely, ratcheting up economic pressure on Teheran as ceasefire talks have floundered, global oil supply is dropping and regional tensions are rising.

Defense Secretary Pete Hegseth told reporters that the US military could keep a naval presence in the region to enforce its blockade of Iran, which has inflicted severe economic damage on the country.

“Indefinitely the United States Navy can maintain a blockade like that because we’ll rotate ships in and out, as we have, and we’ll continue to,” Hegseth told reporters on a trip to Panama.

With a tentative June deal to end the war in tatters, Iran has sought to control the Strait of Hormuz and has attacked some vessels trying to transit the strategic waterway, through which a fifth of the world’s oil and liquefied natural gas travelled before the war began in February.

Two vessels from the state-owned Abu Dhabi National Oil Company were attacked transiting the strait on Thursday evening, United Arab Emirates state news agency Wam reported.

The UAE government condemned it as an Iranian attack. Shipping traffic through the Strait of Hormuz fell to eight vessels on Tuesday, compared with a 10-day average of about 12 vessels, and 130 to 140 ships before the war.

US President Donald Trump has repeatedly asserted that the US has “total control” over the strait.

Iran said in an X post that those claims “do not change the reality. The Strait of Hormuz remains blocked and will not be reopened until Iran’s conditions are accepted”.

Those include removing economic sanctions and releasing frozen Iranian assets.

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The US lifted its blockade of Iran’s shipping and ports for a month in mid-June but has since re-imposed it, cutting off Teheran’s primary source of hard currency and compounding earlier losses from wartime strikes on its energy infrastructure.

Washington previously said it would lift the Iranian blockade once Iran and Oman, which sit on either side of the strait, reach an agreement to restore commercial shipping.

Shrinking oil supply

Trump has also repeatedly threatened to escalate military strikes and “hit Iran hard”, although he has thus far resisted deploying ground troops or seizing strategic islands and bombing desalination plants.

Earlier this week, Trump suggested he would rely on economic means, rather than military action.

The Republican president is under pressure at home to end a war that is deeply unpopular, with high fuel prices dragging down his approval ratings and potentially eroding his party’s control of Congress in midterm elections in November.

The US has tightened economic sanctions against Iran and other individuals and entities that it says are helping it procure weapons, but the pressure campaign has failed to bring Teheran back to the negotiating table.

Stress is mounting on the global economy.

The International Energy Agency on Wednesday forecast that global oil supply would fall by 4.3 million barrels per day (bpd), or around 4 per cent, this year.

Just a month ago, the agency had forecast a drop of 3.7 million bpd.

Oil prices settled down more than 2 per cent on Thursday after a week of gain, as investors focused on signs of weaker global demand and a sharp increase in US crude inventories.

But reports that Yemen’s Iran-backed Houthis had targeted a Saudi Aramco refinery with drones unsettled the market, renewing concerns about a widening regional war.

Global economists have forecast a sharp drop in global growth as a result of the war, and potentially a swing into recession in some areas, warning that the impact will grow if the war is not ended soon. REUTERS