Shippers and transportation providers could see their fuel prices spike if Iran makes good on a plan to block oil tankers in the Strait of Hormuz that are headed to countries no longer buying its crude, according to reports.
In reaction to tightening Western sanctions, Iran on Monday introduced legislation that would work to disrupt the trade lane in which one-fifth of the world’s oil is transported. But it’s unclear whether the legislation will pass and how much Iran could disrupt shipping in the strait, considering the U.S. Navy’s Fifth Fleet patrols the waters, according to the New York Times.
Escalating tensions between Iran and the U.S. raised fears earlier this year that Iran could shut down the shipping channel. Until recently, however, those fears have diminished, and oil prices have fallen from the roughly $100 a barrel to about $85 a barrel.
The European embargo on Iranian crude oil took effect Sunday, compounding U.S. sanctions that kicked in Friday. The European sanctions also ban insuring oil tankers that ship Iranian crude.