Recent findings by U.S. intelligence agencies reportedly suggested that Iran can now shut down the Strait of Hormuz at will, irrespective of the impending framework agreement scheduled for signing in Geneva on Friday.
Iran is contemplating an economic "nuclear option" if negotiations collapse, using the Houthis to disrupt shipping through the Bab-el-Mandeb Strait, a critical trade route linking the Red Sea and Indian Ocean, potentially threatening global commerce, CNN reported on Tuesday.
The intelligence agencies believe this newfound power could have far-reaching implications for the global economy, as per the report. "We have now handed Iran de facto control over the strait - a weapon more powerful than any nuke," a source disclosed to CNN.
Iran has also shown it can carry out precision strikes on Gulf nations' energy infrastructure, giving Tehran another powerful lever it can use to advance its strategic interests. Its capacity to weaponize the strait is strengthened by a substantial arsenal that includes missiles, drones, and small, fast boats.
However, a high-ranking U.S. official told the publication that Iran cannot reap "any benefits" from the agreement unless the strait remains open and Iran adheres to the agreed terms. He added that Washington would gradually ease its blockade only when Tehran restores shipping through the Strait, indicating that the U.S. would maintain leverage throughout the process.
White House did not immediately respond to Benzinga's request for comments.
Three Iranian Oil Tankers Defy US Blockade
The Strait of Hormuz is a vital global trade route, responsible for over a fifth of the world's crude oil supply. According to a CNBC report on Wednesday, three Iranian tankers carrying nearly five million barrels of crude oil have recently managed to bypass the U.S. Navy blockade in the Strait of Hormuz.
Two sanctioned supertankers owned by Iran's National Iranian Tanker Company, Diona and Hero 2, passed through the U.S. Navy blockade carrying a combined 3.8 million barrels of Iranian crude, according to Kpler data. A third Iran-linked tanker transporting another 1 million barrels of crude also cleared the blockade on Wednesday.
Notably, a Reuters report on Tuesday suggested that the U.S. military has been covertly carrying out ship-to-ship oil transfers in the Gulf since early May. This operation, similar to Iranian tactics used to circumvent sanctions, has enabled oil movement despite an Iranian blockade and limited availability of willing shippers.
WTI crude oil declined 1.30% to $75.22 per barrel, while Brent crude was trading 0.78% lower at $76.53 per barrel as of 3:24 a.m. EDT.
Iran Deal Centers On Oil Trade, Funds
A WSJ report on Tuesday suggested that the U.S.-Iran deal would allow Tehran to resume oil and fuel exports immediately, with the U.S. granting sanctions waivers as an early incentive for the country to de-escalate the conflict. The waivers would also cover key support services such as banking, shipping, and insurance needed to facilitate the sales.
The framework agreement also reportedly includes a proposed $300 billion private investment fund, with over half the funding already pledged, to encourage a final deal. Backed by private companies worldwide, the fund would invest in Iran's energy, logistics, manufacturing and transport sectors.