Iran blockades Strait of Hormuz, driving oil prices up amid nuclear talks

Approximately 17 million barrels of crude oil pass through the Strait of Hormuz daily—30% of the world's seaborne oil transport and about 87% of Japan's imported crude oil pass through this single point. Iran's execution of a 72-hour functional blockade, under the guise of an "exercise" through the IRGC (Islamic Revolutionary Guard Corps), is not merely a demonstration of intimidation. It is an experiment that proved to the international community that "they can actually do it." Crude oil surged by +23% during these 72 hours, and the fact that "they can do it" can no longer be erased by any diplomatic effort. The precedent set in the global energy market will change all future negotiations, insurance, investments, and geopolitical calculations.

📋 WHAT HAPPENED

• At 6:00 AM on January 17, 2026 (Persian Gulf Standard Time), the IRGC Navy officially declared "Operation Talin" and deployed 6 frigates and 18 patrol boats near the southeastern exit of the Strait of Hormuz. 23 tankers were forced to halt for up to 36 hours, with two of them temporarily facing grounding risks after dropping anchor.
• Just 3 hours after the blockade declaration, Brent crude surged by $10. The first 8 hours before the Tokyo market opened saw the largest price movement, with the cumulative increase over 72 hours reaching +$18 (+23%), breaking past $96/barrel. Refineries across Asia began emergency inventory checks.
• The U.S. 5th Fleet (Bahrain) immediately formed a carrier strike group centered around the "USS Roosevelt (CVN-71)" and deployed it towards the Strait of Hormuz. F-35C fighter jets patrolled the Strait's airspace 24 hours a day, maintaining a tense standoff with IRGC frigates within 20 nautical miles for 40 hours.
• Saudi Arabia's Aramco and UAE's ADNOC simultaneously activated emergency strategic reserve plans. An estimated 32 million barrels (1.9 days of global oil consumption) were released into the market, successfully curbing the rise in Brent prices temporarily. However, the release price was significantly below market price, with estimated losses for both countries at $1.8 billion.
• The UN Security Council convened an emergency meeting on the morning of January 18. Russia and China simultaneously exercised their veto power against a resolution proposed by the US, UK, and France for "ensuring freedom of navigation and immediate opening of the Strait of Hormuz," paralyzing international collective enforcement action within 24 hours of its initiation.
• The Japanese government considered releasing 20 days' worth of national oil reserves (statutory 90 days, actual 148 days) at a cabinet meeting and requested an emergency extraordinary meeting of the IEA. Coordination for a coordinated release framework began with South Korea and the European Commission, with 31 IEA member countries entering a state of readiness for a total coordinated release of 60 million barrels.
• Exactly 72 hours after the start of the blockade, at 6:00 AM on January 20, IRGC Navy Commander Alireza Tangsiri declared that "Operation Talin has achieved all its objectives as planned and concluded," and gradually withdrew the frigates. By using the phrase "exercise concluded," a domestic narrative was crafted, portraying it not as a "retreat due to defeat" from an external perspective, but as the "completion of a successful plan."

🌐 OVERALL PICTURE

The 72-hour blockade has ended. However, what this incident left the world with is neither a temporary surge in crude oil prices nor diplomatic tension. It is the irreversible establishment of the perception that "a state actor with the will to blockade Hormuz exists in the Middle East." This precedent will not disappear. All future energy security policies, tanker insurance premium calculations, power balances in Middle East peace negotiations, and nuclear negotiation terms—all will continue to incorporate the premise that "the next blockade is possible." To understand this structure, it is necessary to dissect why the implicit equilibrium that lasted for 38 years collapsed, and to analyze the interests and limitations of each actor.

📖 HISTORICAL CONTEXT

The military use of the Strait of Hormuz dates back to the "Tanker War" during the Iran-Iraq War from 1980-88. At that time, Iran attacked an average of 30-40 tankers per month in the Persian Gulf, attempting to economically suffocate Iraq's oil exports. In response, Iraq attacked Iranian tankers in the Arabian Sea outside the Strait, leading to a chain of retaliation. Taking the situation seriously, the United States conducted "Operation Earnest Will" in 1987-88, raising the U.S. flag on Kuwaiti tankers and escorting them, followed by "Operation Praying Mantis (April 1988)," which destroyed two Iranian oil platforms. This Operation Praying Mantis (Tafarin) etched a deep strategic lesson into Iran: "Fighting the U.S. with conventional naval power will always result in defeat. Asymmetric tactics are the lifeline." For 38 years since then, Iran repeatedly used the threat of a Hormuz blockade but never actually carried it out. An implicit equilibrium functioned between Iran and the international community, where "executing a blockade is a last resort."

The direct trigger that broke this equilibrium lies in two events at the end of 2025. First, in November 2025, the U.S. Treasury Department activated an "Enhanced Sanctions Package against Iranian Oil," explicitly stating that third-country companies and financial institutions purchasing Iranian oil would be cut off from the U.S. financial system. As a result, several Chinese refineries significantly reduced their purchases of Iranian oil, and Iran's monthly oil export revenue is estimated to have decreased by 40%. Second, a hardline candidate was elected as Iran's next president in the late November presidential election, shifting the internal power balance with moderates. The confluence of these two factors is believed to have led hardliners within the IRGC to conclude that "economic hardship can be transformed into diplomatic leverage," inclining them towards an internal decision to execute the blockade.

Another unseen background factor is the health of Supreme Leader Khamenei (85 years old) and the succession issue. From the latter half of 2025, multiple diplomatic channels began circulating information that "the selection of Khamenei's successor is intensifying." The peculiarity of Iranian politics is that the succession issue is not officially discussed. Therefore, power struggles within the IRGC create a motive to use hardline external policies as "proof of revolutionary legitimacy." There was a domestic incentive for the general who executed the blockade to be evaluated as a "capable leader" within the IRGC, gaining an advantageous position in the succession issue. In Iranian political history, periods of supreme leader transition have consistently been "periods of proof" for hardline external policies. Immediately after the transition from Ayatollah Khomeini to Khamenei (1989), Iran strengthened its involvement with Hezbollah in Lebanon, staging the "export of the revolution." After the 1997 presidential election, the IRGC independently expanded its sphere of influence near the Afghan border. If the current succession process officially begins, the next supreme leader will be politically required to undertake external actions to prove their "revolutionary legitimacy." The possibility that the Hormuz blockade was used as a "pre-inauguration performance" is a conclusion derived from purely rational calculations. It is highly probable that the blockade, diplomatically termed an "exercise," served a dual function as a "means of power struggle" domestically.

👥 STAKEHOLDER MAP

🔍 READING BETWEEN THE LINES — What the News Isn't Saying

The biggest mystery not reported is "who gave this order." While the IRGC Navy Commander called it "Operation Talin," executing a functional blockade of the Strait of Hormuz without the prior approval of Supreme Leader Khamenei is impossible given Iran's political structure. However, if Khamenei truly pre-approved the blockade, why did it unconditionally withdraw in just 72 hours? Was it an intentional effort to create the impression that "Iran's reactions are unpredictable," or was it pushed back by unexpected international reactions—especially strong unofficial pressure from China? Neither interpretation can be proven by primary sources at this point. Iran's decision-making structure ostensibly has a vertical chain of command: "Supreme Leader → IRGC Top → Military Staff," but actual decisions are more fluid and multipolar. It is highly probable that the plan was drafted within the hardline IRGC and proceeded with Khamenei's unofficial "tacit approval." In other words, the interpretation is that it progressed as a "plan that was not rejected" rather than an "explicit order." This ambiguous decision-making structure systematically eliminates answers to the fundamental question in diplomatic negotiations: "Who can be spoken to to stop it?"

Part of the answer lies in the "institutionalization of internal conflict." Moderate Foreign Minister Araghchi is said to have opened an emergency back-channel negotiation route through Oman's Foreign Minister Tamim just 12 hours after the blockade began. There is information that this channel was crucial for a resolution within 72 hours, and if true, it means the moderates intentionally played the role of "resolving an IRGC-created crisis through diplomacy." The ambiguous conclusion of the blockade as "exercise concluded" is meticulously designed so that both hardliners can explain it domestically as "we showed we could do it," and moderates as "we stopped it through diplomacy," both claiming "victory." This inconsistency—the inability for outsiders to determine who is at the center of decision-making—is the characteristic that makes Iran most dangerous as a negotiating partner. The more the U.S. talks with moderates, the more it creates a dilemma that "benefits the IRGC," eliminating exits from all negotiation tables.

Another unseen battlefield is the insurance market. War risk insurance premiums applied to tankers passing through the Strait of Hormuz surged 8-12 times their normal rates immediately after the blockade declaration. Even weeks after the "exercise concluded," premiums remain at 3-4 times their usual level. In the London Lloyd's insurance market, discussions have begun to establish "Hormuz Risk" as an independent insurance category, and the permanent inclusion of a risk premium is being considered. This means that actuarial experts have statistically begun to factor in that "the next blockade will definitely come." Insurance premiums are more honest than diplomatic documents—actuaries do not believe the words "the exercise is over."

The final unseen battlefield is "digital infrastructure." Almost all modern tankers operating around the Strait of Hormuz are equipped with autonomous navigation and positioning systems that rely on GPS and AIS (Automatic Identification System). Multiple maritime security agencies have recorded that the IRGC has already carried out GPS spoofing (attacks that transmit false location information to misguide tankers) multiple times in the Persian Gulf region between 2019 and 2023. In parallel with physical blockades, digitally deceiving and "guiding" tankers into Iranian territorial waters for capture—this hybrid tactic has already been demonstrated by the IRGC as a viable means for future exercises. Even if a physical blockade is lifted, digital interference can quietly continue after the "exercise concluded." The International Maritime Organization (IMO) has been considering mandating the use of multiple electronic navigation systems as a countermeasure against GPS spoofing since 2023, but the implementation rate is currently low. The insurance industry has begun adding this "digital Hormuz risk" as a separate, independent insurance category from physical risk, and the increase in its premiums continues to be incorporated into logistics costs in an invisible form.

NOW PATTERN

Crisis Exploitation × Spiral of Conflict × Path Dependence

Nowpattern (Crisis Exploitation)

Strong actors artificially create crises at moments when negotiating power is most needed. This is not a sign of weakness but a highly rational tactic in asymmetric warfare. Iran chose to convert its economic hardship from intensified sanctions into geopolitical leverage. The +23% surge in oil prices immediately created domestic political costs for G7 nations maintaining sanctions—rising gasoline prices directly impact voters, generating political pressure for "dialogue over sanctions." Within 48 hours of the blockade, the foreign ministers of Germany, France, and Italy individually stated the "urgency of a diplomatic solution." Germany reportedly demanded the inclusion of "resumption of diplomatic engagement with Iran" in its coalition negotiations in February 2026, while France made unofficial contact with the Omani Foreign Minister through the Élysée Palace. Italy was reported to have unofficially sounded out technical cooperation negotiations with Iranian companies in the natural gas sector within 48 hours of the blockade's lifting. All of these actions created cracks in the united front of sanctions policy, giving the IRGC grounds to calculate that "time is on our side. The G7 will self-destruct." The typical structure of the Crisis Exploitation pattern is a three-stage process: "escalation → presentation of an exit → acquisition of concessions." Although the third stage (substantive concessions) was not achieved this time, it was not a failure. The demonstration of "capability" will permanently function as an implicit threat in future negotiations. The paradox that intensifying sanctions increases the frequency and scale of the next blockade systematically narrows Western policy options.

Nowpattern (Spiral of Conflict)

The spiral of "blockade → US carrier deployment → blockade lifted → sanctions continued → next blockade" raises the hurdle for the next escalation while consuming each player's countermeasures. The deterrent effect of the US deploying a carrier strike group is maximal the first time. From the second time onwards, as the precedent that "Iran acts even with deployment" accumulates, the deterrent effect of the same action decreases exponentially. This is a structural weakness that deterrence theory calls the "problem of commitment." Saudi Arabia's reserve release is similar. The first time it functioned as an effective shock absorber for the market, but the next time, the market will anticipate "they'll do it again," reducing the initial fear premium and diminishing the market stabilization effect. Meanwhile, Iran accumulates precedents that "they can do it," and has an incentive to escalate next time with a longer duration and greater demands. The worst-case scenario for this spiral structure is "both sides acting rationally, yet steadily moving towards an unintended accidental conflict"—the most dangerous pattern in history. It is structurally analogous to the path taken by the Balkan Peninsula in 1914. Furthermore, an often-overlooked point is Israel's calculation. The demonstration of Iran's ability to blockade the Strait strengthens Israel's perception that "time is running out," potentially accelerating its decision for a preemptive strike on Iranian nuclear facilities. At each stage of the spiral, third-party actors intervene, expanding the risk of chain reactions that exceed the control of the original parties.

Nowpattern (Path Dependence)

The IRGC, having defined the blockade as a "successful exercise" in 72 hours, will choose blockade as its first option in the next crisis as well. Past successes become embedded in an organization's decision-making routines, hindering the consideration of alternative means—this is the essence of path dependence. Conversely, a world that has learned "even if blockaded, it will be resolved in 72 hours" will mitigate overreactions to the next blockade, gradually lowering the fear premium in the crude oil market. However, at the same time, this cognitive bias has created a blind spot: when a "real long-term blockade (2 weeks or more)" occurs, the market might misread it as "it will end in 72 hours again." Path dependence is embedded in the cognitive biases of both sides of a conflict, determining the "form," "scale," and "timing" of the next crisis. Response rules learned from past incidents will, conversely, cease to function in the next crisis—this shares the same structure as France's historical failure in the 1930s, clinging to the Maginot Line. It's not losing the war you prepared for, but losing a war different from the one you prepared for.

Nowpattern (Intersection — CONFLUENCE OF 3 DYNAMICS)

The intersection of these three dynamics is the "Institutionalization of Uncertainty." Iran has been upgraded from a "country that can do it" to a "country that is willing to do it." This shift in perception is not merely psychological but will manifest over 5-10 year cycles as concrete behavioral changes: increased defense budgets in GCC countries (Saudi Arabia adding $8 billion to its 2026 budget), a permanent rise in tanker insurance premiums (an additional $4 billion in annual revenue for the insurance industry), and accelerated investment in energy diversification. Japan's initiation of a national project to estimate the costs of switching to the Cape of Good Hope route, and South Korea's government committee-level discussions on reconsidering its dependence on the Middle East, are evidence that the "72-hour exercise" triggered a long-term strategic shift. The most significant change is that the discussion of energy security has moved from "contingency scenario analysis" to "daily cost calculation." A temporary crisis creating permanent geopolitical realignment—this is the essence of Nowpattern and the greatest legacy of this incident.

📚 PATTERN HISTORY

1973 Oil Embargo — The Precedent of "Oil as a Weapon" and the Decisive Difference from This Incident

On October 17, 1973, OAPEC prohibited oil exports as retaliation against the United States for supporting Israel in the Fourth Middle East War (Yom Kippur War). Crude oil prices quadrupled (from $3 to $12/barrel) in the following four months, leading to stagflation in developed economies. The "oil as a weapon" at that time was a "direct supply cut-off." This Hormuz blockade is a new form, "disruption of transit routes," but its effect of placing energy security at the core of geopolitics is the same. The institutional legacy created by the 1973 embargo—the establishment of the International Energy Agency (IEA) in 1974 and the obligation for member states to hold at least 90 days of oil reserves—enabled the current Saudi-UAE emergency reserve release. However, the biggest difference between the two is "sustainability." The 1973 embargo was a political decision by multiple states forming the Arab oil-producing bloc, and it ended due to internal fissures over time. This Hormuz blockade is an action that the IRGC, a quasi-independent military organization, can technically repeat any number of times. The reserve system designed by the IEA only provides a buffer of about two weeks, meaning that a prolonged blockade would result in a global impact exceeding that of 1973.

2019 Tanker Attacks — Intentional Evolution from Gray Zone Operations to "Overt Daytime Action"

In June-July 2019, the Norwegian-flagged "Front Altair" and the Japanese-operated "Kokuka Courageous" were attacked near the Strait of Hormuz. The U.S. claimed the IRGC used limpet mines, but the evidence remained undisclosed, and Iran completely denied involvement. Maintaining "plausible deniability" was the core of the 2019 gray zone operations. As long as outsiders could not "prove" IRGC involvement, coercive countermeasures could not be justified—this is the dynamic of gray zone tactics. The biggest difference this time lies in the "choice of overtness." The IRGC officially declared the blockade as "Operation Talin" and executed it for 72 hours in front of the international community. This transition represents an intentional strategic shift from the 2019 tactic of "no one knows who did it" to "we did it. There's no need to admit or deny it." By voluntarily abandoning plausible deniability, the IRGC raised "negotiation costs" and established a new rule: "proof is not an issue next time." Now that the West can no longer use the shield of "cannot prove," the response to a blockade has shifted from "identifying the culprit" to the fundamentally difficult question of "how to deal with a fait accompli." This tactical evolution is the result of the IRGC learning from and studying the international community's reactions since 2019.

2022 Nord Stream Explosion — The "Next Stage" of Energy Infrastructure Weaponization Points to the Future

On September 26, 2022, the Nord Stream 1 and 2 pipelines, laid on the Baltic Sea floor, were destroyed by underwater explosions, causing an estimated $1.2-1.5 billion in damages. While who carried out the attack remains officially undetermined, various theories involving Russia, the United States, Ukraine, and proxies have been proposed, all maintaining "plausible deniability." The reason this incident should be discussed alongside the Hormuz blockade is that it proved the proposition that "energy infrastructure can be weaponized," albeit in a different form. The Hormuz blockade is a tactic of "temporarily obstructing use," while the Nord Stream destruction is a tactic of "permanently incapacitating." The actual occurrence of these two forms of energy attacks within the four years from 2022-2026 fundamentally changed the risk assessment of energy infrastructure. After Nord Stream, Europe rapidly built LNG terminals and eliminated its dependence on Russian gas—an effort that required over $15 billion in infrastructure investment and 3-5 years. The parallel between Japan and Hormuz is more urgent. Internal estimates by the Ministry of Economy, Trade and Industry suggest that switching the main tanker route to the Cape of Good Hope would incur additional annual transportation costs of $0.8-1.2 billion, and transit days would extend from the current 22 to 35-40 days. This is a scale that demands a fundamental reevaluation of Japan's manufacturing just-in-time supply chains. South Korea, with approximately 73% of its crude oil imports passing through Hormuz, is in an even more vulnerable position than Japan. Unlike three years ago when Nord Stream was viewed as "Europe's problem," Japan and South Korea are now at a turning point where they must perceive Hormuz as "their own problem" and immediately begin large-scale investments in alternative routes. The nature of attacks on energy infrastructure has shifted from "acts of war" to "negotiation tools"—this shift in perception is the greatest geopolitical legacy (for the attacker) and the greatest security threat (for the defender) that Nord Stream and Hormuz have left the world.

🔮 FUTURE SCENARIOS