Iran’s latest attacks on commercial shipping in the Strait of Hormuz sent oil prices sharply higher in recent days — a reminder that Tehran can still rattle global energy markets.
But the latest spike also highlights a bigger question facing the Trump administration: Has Iran begun losing its ability to use the strategic waterway as economic leverage over Washington?
Growing oil production, alternative export routes and new shipping patterns suggest Iran’s ability to weaponize the Strait of Hormuz may be steadily weakening — even if it can still trigger short-term price shocks.
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Vice President JD Vance in late June linked global oil supplies directly to negotiations with Iran.
“I think what the president has told us to do is use this MoU (memorandum of understanding) to sort of refill the world’s oil economy, to refill some stocks, and then to see where the hand is,” Vance said during an interview with “The Michael Knowles Show” podcast June 30.
That outlook faced its first major test in recent days after Iran renewed attacks on commercial shipping. President Donald Trump declared the U.S.–Iran memorandum of understanding and ceasefire “over” and warned his administration could again impose a naval blockade on Iran if attacks on commercial shipping continue.
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The U.S. Energy Information Administration in recent days forecast worldwide crude production and trade flows will rebound to near pre-conflict levels by the end of the year, with most previously shut-in production returning during the first quarter of 2027. The agency expects increased global production to lower crude oil and gasoline prices in the months ahead despite continued instability in the Gulf.
The forecast comes as OPEC+ continues increasing production, Gulf producers restore output and exporters rely more heavily on infrastructure that allows crude to bypass the Strait of Hormuz altogether.
Those developments don’t eliminate Iran’s ability to move markets. But they could make it harder for Iran to use oil prices as a way to pressure the United States into negotiating on its terms.
The oil market isn’t the only thing that has changed.
The conflict has accelerated a shift that already was underway.
Gulf producers increasingly rely on infrastructure built over the past decade to move crude without depending entirely on the Strait of Hormuz. Saudi Arabia can divert exports through its East-West Pipeline to the Red Sea, while the United Arab Emirates has expanded export capacity through Fujairah on the Gulf of Oman, allowing millions of barrels of crude to bypass the narrow waterway altogether.
Commercial shipping has adapted as well. More vessels have shifted toward a southern corridor hugging Oman’s coastline, putting additional distance between commercial traffic and Iran’s coastline while allowing exports to continue despite repeated attacks.
Retired Navy Rear Adm. Mark Montgomery said those changes strike at the heart of Iran’s strategy.
“The southern route creates a route they can’t toll or control.”
Iran’s objective, however, has never necessarily been to shut down the strait altogether.
“The IRGC has been trying to make it commercially unworkable,” former Fifth Fleet commander Vice Adm. Kevin Donegan told Fox News Digital, referring to the Islamic Revolutionary Guard Corps. “These attacks on shipping to me aren’t random. They’re strategy.”
Donegan said Iran’s goal is to raise the cost and risk of commercial shipping, making insurers and shipping companies think twice before returning to normal operations.
Even Iran appears unwilling to completely disrupt the flow of oil. Maritime tracking firm TankerTrackers.com reported Wednesday that three Iranian crude tankers were loaded at Kharg Island. The move underscored Iran’s own dependence on selling oil, even as it continues trying to disrupt commercial shipping elsewhere in the Gulf.
Markets reflected both realities. Oil prices climbed after Iran’s latest attacks renewed fears of broader conflict, but the EIA’s outlook suggests traders also expect additional supply to continue reaching global markets unless the fighting escalates into a sustained disruption.
Iran has proved it can still rattle global oil markets.
The bigger question now is whether rising production, alternative shipping routes and sustained U.S. military pressure have shortened the life of those price spikes — denying Iran one of its most effective tools for influencing negotiations with Washington.
