The Strait of Hormuz, carrying approximately one-fifth of the world's energy shipments, has been largely blocked since the US-Israeli attacks on Iran on February 28. On Thursday (July 16), Eastern Time, the US military continued to escalate its operations, conducting precision strikes on multiple bridges within Iran and reinstating the maritime blockade. Oil prices held onto recent gains, remaining at a one-month high, with market buffers nearing depletion. The global energy supply chain stands at a critical juncture in the coming weeks, with the situation's trajectory impacting the economic lifelines of nations.

I. Escalation of Conflict: US Military Launches Sixth Consecutive Night of Airstrikes on Iranian Infrastructure

On the night of July 16, 2026, the skies over the Strait of Hormuz were once again torn apart by explosions. The U.S. Central Command announced that, starting at 2:00 PM local time on July 16 (2:00 AM Friday Beijing time), the U.S. military launched its sixth consecutive night of military strikes against Iran. According to Iran's Tasnim News Agency, U.S. forces attacked multiple infrastructure sites in southern Iran that day, including airports, bridges, and railway stations, resulting in at least two deaths and numerous injuries. Shahr Airport in Sistan-Baluchistan province was attacked by missiles, with three loud explosions heard near the airport, causing a power outage. In Hormozgan province, U.S. forces attacked two bridges at the port of Hamir, killing two and injuring four; the Bandar Abbas railway station was also attacked, injuring two. Furthermore, the bridge connecting Bandar Abbas and Shiraz was also hit. The Hormozgan provincial government confirmed early on July 17 that two bridges in the province had been attacked. A location near Bostan in Khuzestan province was also attacked by U.S. forces. Strategic Intent: Cutting Off Iranian Supply Lines A senior U.S. official revealed that the core objective of the strikes on multiple Iranian bridges was to cut off supply lines to the port city of Bandar Abbas and its naval base in the Strait of Hormuz. Iran has been using this port and naval base to attack passing ships and project power. Bandar Abbas is home to the Islamic Revolutionary Guard Corps' naval base and is crucial for Iran's control of the Strait of Hormuz and its power projection throughout the Persian Gulf. Earlier this week, the U.S. military also deployed unmanned surface vessels to attack an Iranian submarine and naval facility in the area. U.S. Central Command stated that the current military operation is primarily focused on destroying missile and drone facilities, as well as other outposts used by Iran to threaten shipping. According to Iranian statistics, as of July 16, U.S. attacks on Iran in July had resulted in 35 deaths and over 300 injuries. Latest reports on July 17 indicated that the U.S. attack on a residential area in Bandar Abbas had resulted in one death and eight injuries. Iran's Response In response, Iran launched strikes against U.S. infrastructure in the region and its Gulf allies throughout the Middle East, and continued to attack passing merchant ships. According to IRIB, Iranian military officials threatened to destroy infrastructure across the Middle East if the United States attacks Iranian infrastructure. The Iranian Foreign Ministry issued a statement on July 16 condemning the recent series of US military strikes as a serious violation of the UN Charter and fundamental principles of international law, constituting "war crimes." A spokesperson for the Iranian Foreign Ministry stated that Iran currently has no plans for negotiations.

II. Maritime Blockade: Shipping in the Strait of Hormuz Nearly Come to a Standstill

While conducting airstrikes, the United States is imposing a naval blockade on Iranian ports and coastal areas. On July 14, the U.S. Central Command announced the restoration of the naval blockade against ships entering and leaving Iranian ports and coastal areas. Trump had previously stated that he would impose a "complete blockade" on ships traveling to and from Iranian ports and on any ships carrying goods related to Iran. Shipping data has plummeted . The blockade has been remarkably effective. Data released by the international market services firm Kepler shows that on July 16, only 13 merchant ships passed through the Strait of Hormuz, with 8 leaving the Persian Gulf and 5 entering, a throughput of about one-tenth of the pre-war average. During the peak of the rebound following the June 24 ceasefire agreement, daily throughput reached 57 ships. From July 10 to 12, the number of confirmed transits decreased by approximately 52% compared to the previous week, with only 6 ships remaining on the 13th. The U.S. Central Command stated that since the blockade was reinstated, it has forced three merchant ships attempting to break through the blockade to change course and rendered one uncooperative vessel immobile. U.S. Central Command released photos on Thursday of Marines boarding a merchant ship for a search. White House Press Secretary Caroline Levitt stated on July 16 that Iran "is indeed still in dialogue with the United States and has expressed a desire to reach an agreement with us because they are suffering devastating blows." Levitt claimed that the recent U.S. strikes stemmed from Iran's violation of a memorandum of understanding—Iran promised not to fire on merchant ships passing through the Strait of Hormuz, but "they did." III. Energy Market: Oil Prices Fluctuate at High Levels, Supply Crisis Looms Oil Prices Return to High Levels The renewed closure of the Strait of Hormuz is causing significant volatility in the global energy market. On July 13, Brent crude futures surged 9.59% in a single day, settling at $83.30 per barrel, the largest single-day gain since May 2020. WTI crude futures closed up 9.42% on the same day at $78.14 per barrel. On July 14, Brent crude further climbed above $85 per barrel. On July 15, Brent crude oil was trading at around $84.40 per barrel, up 11% for the week. As of the close of trading on July 16, Brent crude futures settled at $84.23 per barrel, while WTI crude futures settled at $78.95 per barrel. So far this month, Brent crude has risen over 15%, and year-to-date it has risen 40%. Unprecedented Supply Disruptions The International Energy Agency (IEA) previously stated that attacks on energy infrastructure and the blockage of the Strait of Hormuz have led to a reduction of more than 14 million barrels of oil supply per day in the Middle East, making it "the worst oil supply crisis in history." IEA Executive Director Fatih Birol recently stated that the Gulf region's current daily oil supply is only 16 million barrels, a significant decrease from the 24 million barrels before the Middle East conflict. Oil industry executives and analysts warn that global crude oil supply is currently at extremely low levels. If the Strait of Hormuz remains closed for an extended period, oil prices could surge, even surpassing the highs of over $100 per barrel at the beginning of the war. Strategic reserves are being rapidly depleted following the outbreak of the US-Iran conflict in March, when the International Energy Agency (IEA) coordinated the release of a record 400 million barrels of crude oil. The IEA stated last week that its member countries had released nearly three-quarters of this 400 million barrel emergency reserve program. “Despite the large scale, this only represents 20% of our inventory; 80% remains in reserves,” said Birol, referring to the release. However, market buffers are nearing depletion. Amrita Sen, head of market intelligence at Energy Aspects, stated that before the war, the oil market had approximately 400 million barrels of excess inventory (excluding strategic reserves), but now reserves are almost exhausted. One trader revealed that the market has exhausted all energy buffers. It is estimated that supply disruptions caused by the conflict this year have led to a reduction of approximately 1.5 billion barrels in global crude oil inventories. Commodity market analysis firm Kpler stated that to replenish these released reserves, crude oil demand could increase by as much as 664,000 barrels per day until the third quarter of 2027. The oil futures curve has shifted to a premium to the spot price, indicating extreme market concerns about near-term supply. Brent crude oil futures for January delivery are trading at $8.92 per barrel higher than the June delivery contract, marking the largest premium since June 10.

IV. The IEA Director issues an ultimatum "several weeks in advance".

"Oil security remains a critical issue," International Energy Agency (IEA) Executive Director Fatih Birol warned sternly at a Council on Foreign Relations event on July 16. "Oil security remains a critical issue. We should be concerned if the situation does not improve in the coming weeks, and I am indeed concerned." Birol emphasized that the window of opportunity to resolve the crisis is "not measured in months, but in weeks," and the Strait of Hormuz must be "fully open, unconditionally open." He stated, "If the Strait of Hormuz remains closed, the global economy, including the economies of the Middle East, developing countries, and Asia, may face difficulties again." The "painkiller" for oil prices is unsustainable. Despite the significant rise in energy prices, Birol stated that several factors have restrained the increase: China's pre-war oil reserves of over 1 billion barrels, oil conservation efforts through increased use of electric vehicles and public transportation, and the 400 million barrels of oil released in coordination by the IEA. However, Birol made it clear that these remedies "cannot last forever." He also stated that the war with Iran is "the most severe energy disruption in history." Limitations of Increased US Production Birol affirmed the increased US production: "The US production increase is very good... The US has increased crude oil production by 1 million barrels per day, 2 million barrels per day, but it cannot increase it by 10 million barrels per day." This indicates that even with the world's largest oil producer ramping up production, it cannot compensate for the supply gap caused by the strait blockade. Developing Countries Suffer the Greatest Impact Birol pointed out that the oil and gas supply crisis has damaged economies around the world, but this damage is asymmetrical. "The main impact is on Asia, because in the past, 80% to 90% of Asia's energy came from the Strait of Hormuz." Japan and South Korea have been affected, but developing countries, including Pakistan, Bangladesh, and India, have been hit the hardest. Birol particularly emphasized that due to the high price of petroleum products, people in developing countries, especially women, may face potential health risks as they turn to alternative cooking fuels such as excrement and firewood. IEA Still Has Reserves Available Birol stated that after the IEA coordinated the release of oil reserves in March, oil prices fell by about $20 per barrel. This move sends a signal to the market that the IEA may again draw on its oil reserves if the situation worsens. Currently, IEA member countries still have as much as 80% of their oil reserves yet to be released.

V. Global Economic Impact and Market Outlook

Supply chain restructuring is underway. The de facto closure of the Strait of Hormuz is dismantling traditional crude oil trade routes from the Middle East to Asia at a speed far exceeding market expectations. Asian refineries, prioritizing supply chain security over price, are urgently shifting to sourcing crude oil from the US, Latin America, and West Africa and rebuilding their inventories. Trump's earlier plan to charge a 20% "toll" on transit cargo, though later cancelled, still represents a roughly 15-fold difference between the approximately $30 million toll per supertanker and Iran's previous charge of around $2 million. Even sourcing via longer routes may result in a lower overall landed cost compared to Middle Eastern crude oil after paying the toll.

Institutional Views

An institutional research report states that the situation in the Strait of Hormuz has escalated again, and the core contradictions between the US and Iran have not been resolved by the June Islamabad Memorandum of Understanding. It is expected that the core differences between the US and Iran will not be truly resolved in the short term, and the issue of navigation in the Strait of Hormuz will continue to disrupt various global assets until then. Citigroup warns that Trump's plan to impose shipping fees in the Strait of Hormuz significantly increases the risk of further escalation and military conflict. The Citigroup report states: "The possibility of the Iranian government delaying the implementation of the memorandum of understanding is also increasing. In this scenario, oil prices are more likely to remain at 'higher levels for a longer period.'" Multiple geopolitical risks are compounded . In addition to the Strait of Hormuz crisis, the Russia-Ukraine conflict continues to disrupt the energy market. Following a series of long-range drone strikes against Russian oil refining systems, Russian refined oil supplies have been further disrupted. Russia is the world's second-largest diesel exporter, and European diesel wholesale futures prices rose 14% this week. Furthermore, according to CCTV International News on July 16, Iran has asked the Houthi rebels in Yemen to prepare to block the Red Sea oil route should the US attack Iranian power and other infrastructure. If the Strait of Hormuz and the Bab el-Mandeb Strait are both disrupted, the global energy supply chain will face a major shock.

[Editor's Summary]

On July 16, 2026, the US launched its sixth consecutive night of airstrikes against Iran, focusing on infrastructure such as bridges, with the aim of cutting off supply lines to Bandar Abbas. On the same day, shipping traffic in the Strait of Hormuz dropped to one-tenth of pre-war levels, with only 13 merchant ships passing through. Brent crude futures closed at $84.23 per barrel, up 15.51% for the month. International Energy Agency Executive Director Fatih Birol warned that global energy security would face serious threats if the strait did not reopen within weeks. Currently, three-quarters of the world's strategic oil reserves have been released, and the market buffer is nearing depletion. Developing countries in Asia, heavily reliant on energy transport through the Strait of Hormuz, will suffer the greatest impact. Institutions such as Citigroup and CITIC Securities predict that the core differences between the US and Iran are unlikely to be resolved in the short term, and high volatility in energy prices will become the norm. Multiple geopolitical risks—the Hormuz blockade, the Russia-Ukraine conflict, and the potential crisis in the Red Sea—are pushing the global energy market to the brink of an "empty tank."

Frequently Asked Questions

Q1: Why is the US targeting Iranian bridges instead of directly striking military targets? A: The bridges are critical infrastructure connecting Bandar Abbas to the Iranian interior. Bandar Abbas is home to the Islamic Revolutionary Guard Corps naval base and is vital to Iran's control of the Strait of Hormuz. By destroying the bridges, the US aims to cut off supply lines between the port city and the interior, weakening Iran's ability to transport supplies and personnel to the base. This is an "indirect strike" strategy—limiting Iran's military operational capabilities in the Strait of Hormuz by paralyzing its logistics network, rather than directly confronting the Iranian navy. Q2: How significant is the impact of a Strait of Hormuz blockade on global oil prices? A: The Strait of Hormuz typically carries about one-fifth of global energy transport. The current blockade has already resulted in a reduction of more than 14 million barrels of oil supply per day in the Middle East. On July 13, Brent crude surged 9.59%, the largest single-day increase since May 2020. Brent crude has risen more than 15% so far this month and 40% year-to-date. Oil industry executives warn that if the strait remains blocked for an extended period, oil prices could once again exceed $100 per barrel. Q3: What does the International Energy Agency's release of 400 million barrels of oil reserves mean? A: Following the outbreak of the conflict in March, the IEA coordinated the release of a record 400 million barrels of strategic petroleum reserves to stabilize oil prices. This move caused oil prices to fall by about $20 per barrel. However, the IEA stated last week that it had released nearly three-quarters of this. This means that the market buffer is rapidly depleting—the approximately 400 million barrels of excess inventory before the war has almost disappeared. Birol stated that the IEA still has 80% of its reserves available, but the scale and effectiveness of the next release will face greater challenges. Q4: Why are Asian countries most affected? A: In the past, 80% to 90% of Asia's energy imports were transported via the Strait of Hormuz. A strait blockade means that oil import routes for countries like Japan, South Korea, and India have been cut off or severely restricted. These countries have been forced to urgently shift to purchasing crude oil from the United States, Latin America, and West Africa, but this involves longer transportation distances and higher costs. Developing countries such as Pakistan, Bangladesh, and India have been particularly hard hit because rising energy prices directly push up inflation, and these countries lack sufficient strategic reserves to buffer the impact. Q5: Why did the US-Iran memorandum of understanding signed in June break down so quickly? A: The memorandum of understanding signed on June 17th briefly restored navigation through the Strait of Hormuz. However, the core conflict—the issue of control of the strait—remained unresolved. Iran continued to attack passing merchant ships, while the US considered Iran to have violated its commitments. On July 9th, Trump announced the ceasefire agreement was no longer valid, and on July 12th, Iran announced the closure of the Strait of Hormuz. The CEO of Dubai-based energy consultancy Qamar Energy stated that the memorandum's purpose was "simply to buy time." The fundamental disagreement lies in the fact that both sides claim to be the "guardians" of the Strait of Hormuz, a structural contradiction that is difficult to reconcile in the short term. At 09:24 Beijing time, Brent crude oil was trading at $85.34 per barrel.