The ultimatum is out! Iran has vowed to cut off oil flows in the Gulf, while the U.S. military targets facilities in Tehran—an escalating U.S.-Iran standoff is rapidly intensifying, putting global energy markets to a severe test.

Currently, both sides have moved from verbal deterrence to a phase of substantive confrontation, with the safety of passage through the Strait of Hormuz and the stability of global oil supply chains becoming the focus.

Core flashpoint: Infrastructure threats and an oil embargo

The U.S. takes a hard line: The Trump administration has clearly warned that if Iran attacks vessels in the Strait of Hormuz, the U.S. military will destroy key infrastructure such as Iran’s bridges or power plants, including facilities around the capital, Tehran. This threat is meant to force Iran to stop interfering with international shipping.

Iran’s strong response: Iran’s armed forces have issued an “ultimatum,” saying that if the U.S. carries out its threats to strike infrastructure, Iran will cut off all oil flows in the Gulf region, and treat all oil, natural gas, and economic infrastructure in the area as legitimate targets for attack. Iran’s parliamentary speaker was even more blunt, saying the situation in the Strait of Hormuz “will not return to pre-war conditions.” Its logic is “either everyone has it, or no one does.”

Real-world impact: Shipping disrupted and oil prices surge

Strait of Hormuz passage plunges: According to data from Lloyd’s, as of the week of July 20, the total number of vessels transiting the strait fell by 66% from the previous week. The number of crude oil and LNG transport vessels dropped from 90 to 30. On July 19, Iran’s Revolutionary Guards Navy confirmed that vessel transit through the strait is temporarily at zero, and any ship attempting to cross will be treated as hostile action.

International oil prices jump on the spot: Driven by mounting tensions, Brent crude futures have surged by more than 3%, while U.S. crude oil front-month has risen by 2.54%. Market concerns continue to grow over the possibility that nearly a quarter of the world’s seaborne oil trade could be disrupted.

Diplomatic stalemate and military escalation go hand in hand

Although U.S. Secretary of State Rubio still says he is willing to resolve the crisis through diplomatic channels, he emphasized that Iran “lacks sincerity.” Meanwhile, the U.S. military has launched airstrikes inside Iran for several consecutive nights, with the strike range even expanding to electrical power facilities near nuclear power plants. Iran is retaliating by firing missiles and drones at U.S. military bases in Kuwait, Bahrain, and Jordan. At present, countries such as Qatar and Pakistan are actively mediating in an attempt to salvage the temporary ceasefire agreement signed in June, but the outlook remains unclear.

This game is no longer just a confrontation between the U.S. and Iran—it also affects the world’s energy lifeline. If the situation further spirals out of control, its impact on the global economy will go far beyond the military realm.