Rising tensions between Tehran and Washington have led to a US military blockade of Iranian ports at the Strait of Hormuz. Amid escalating conflict, reports now suggest that this move could severely impact Iran’s economy. United States President Donald Trump on Monday had already warned that the action could further disrupt the flow of oil, food, fertiliser and other goods.

Tehran Likely To Suffer $435 Million Per-Day Loss

According to The Wall Street Journal report, the blockade could cost Tehran up to USD 435 million or Rs 4,081 crore a day for economic damage. However, Iran’s loss depends on several factors that are difficult to predict at this point. For example, it relies on how impenetrable the US blockade proves to be, and to what extent can Tehran bypass the Strait of Hormuz by rerouting oil exports through the Jask terminal. Opened in 2021, the Jask oil terminal is a strategic Iranian port on the Gulf of Oman.

Miad Maleki, a former official with the Treasury Department's Office of Foreign Assets Control, told WSJ, “The US quarantine of Iran's ports will cost Iran about USD 435 million a day in economic damage.” Lost exports, primarily crude oil and petrochemicals, account for approximately USD 276 million of the estimated damages. However, Maleki’s calculations rely on Iran exporting 1.5 million barrels of oil daily at a wartime rate of USD 87 per barrel, with over 90 per cent of that volume moving through Kharg Island in the Persian Gulf.

Amid growing uncertainty over damages, it is expected that short-term impacts can be effectively mitigated. This is possible because of a massive backup supply held by Iran. According to Kpler report, Tehran already had 154 million barrels of oil loaded onto tankers stationed outside the Persian Gulf before the blockade started. This oil can still be sold and delivered.

Why Did Trump Announce Blockade?

Trump's decision to block Iranian ports at the strait came after peace talks between Washington and Tehran in Islamabad collapsed on Saturday. Announcing the move, he wrote on Truth Social, “Effective immediately, the United States navy, the finest in the World, will begin the process of blockading any and all ships trying to enter, or leave, the Strait of Hormuz,” Trump wrote on his social media platform. “Any Iranian who fires at us, or at peaceful vessels, will be blown to hell.”

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