The US is moving to choke Iran’s oil lifeline. The market is starting to price something much bigger because the Trump administration naval blockade of Iran is not going to work.

US President Donald Trump has announced a naval blockade of Iran that goes into effect on April 13. The idea is to cut Tehran off from its oil export revenue. However economists warn that halting the flow of traffic out of the Persian Gulf will have major economic consequences around the world. Moreover Tehran has threatened to block Bab al-Mandab straits at the mount of the Red Sea that will only make the crisis worse.

Iran says that if Trump carries out his Strait of Hormuz blockade, Iran will respond. It has already threatened to shoot any US naval ship that tries to enter the Strait of Hormuz. It has also threatened to escalate by taking control of the Bab el-Mandeb Strait and block international traffic through the Red Sea with help of Yemen’s Houthis. That would cut off another 12% of global energy supply, bringing the total shortfall to 32% and inflaming the already growing energy crisis.

And these are only two options in Tehran’s arsenal of asymmetric responses to the Trump administration’s efforts to force Iran to capitulate. The stated aim is economic pressure. The immediate effect may be systemic risk because the oil does not just belong to Iran.

Trump’s blockade is aimed at Iran’s tankers that have been traversing the strait unimpeded since the start of the conflict and seen volumes exported rise from around 1mn b/d to 1.7mn-2mn b/d and earning an estimated $2bn a week - more than it did before the start of the war. Trump hopes to throttle this trade and cause an economic collapse.

The bulk of the tankers moving through Hormuz are overwhelmingly Chinese, with less going to Indian, Iraqi and Korean. Interdicting that flow is not a sanctions tweak. It is a direct challenge to multiple trading partners at once — and, in practice, a constraint on global supply.

“Seizing legally operating ships in international waters simply because they are trading with an adversary of the United States is far more complicated,” said Patricia Marins, military analyst at bne IntelliNews. “And even if such a move were somehow executed, it would only remove more oil from the global market and drive prices even higher.”

That is not a price story. That is a supply story. That is the essence of Iran’s asymmetric strategy. The US is thinking purely in terms of fire power and cash from the barrel. Tehran understands that its restrictions have much wider economic consequences that cause enormous economic pain.

“Within 10 days, parts of the global economy will start running short of critical goods,” said Robert Pape, Professor of Political Science at the University of Chicago. “Not just higher prices — shortages.”

“We are now crossing into step two. That’s when things break,” he said. “Factories don’t slow because costs rise. They stop because materials don’t arrive.”

Escalation rhetoric and military signalling

And Iran is not going to take a naval blockade lying down. Iran’s Supreme Leader Ayatollah Mojtaba Khamenei issued a sharply worded statement on April 12 following the collapse of ceasefire talks.

“We trusted you by accepting the truce, thinking you would use it to recharge your ships and weapons,” he said. “But above all, we wanted to show the world just how stupid and weak you are.”

He added: “We’re telling you clearly: the stocks you accumulate in two weeks will be depleted in just two days.” Khamenei warned that Iran would “allow no energy centre to function after today” and promised retaliation against regional infrastructure.

Iranian media reported preparations by the Islamic Revolutionary Guard Corps for missile and drone strikes targeting Israel and Gulf states, with some countries reportedly excluded after separate understandings with Tehran.

Blockade in theory, war in practice

In Washington, the blockade is framed as leverage. In markets, it reads as removal of barrels and the decline in feedstocks essential to industry.

Even partial enforcement implies fewer cargoes leaving the Gulf. Full enforcement risks confrontation with non-Iranian shipping — a legal and military grey zone that quickly turns binary.

“The economic strangulation Trump is now facing is exposing the fragility of the team he assembled for the White House,” Marins said. “Strangling the Iranian economy is not a simple task.”

Analysts question the feasibility of enforcing the blockade without widening the conflict. “How exactly does Trump plan to intercept these vessels?” said Marins. “Seizing legally operating ships in international waters simply because they are trading with an adversary of the United States… remove more oil from the global market and drive prices even higher”, fuelling inflationary pressures, particularly in the US.

The US is now in a, so far, undeclared war with Iran so it is free to stop or attack Iranian tankers. But it is not at war with China, India, Bangladesh or Greece. Using its navy to stop tankers from those countries is an act of war. International maritime law gives any ship that is not engaged in military activity the “right of innocent passage” to sail through any waters. China in particular is unlikely to allow its tankers to be stopped by the US navy without response.

Meanwhile, Iran is not without buffers. Trade corridors through Central Asia and the Caspian Sea are expanding, with roughly $7bn in rail trade and more than 5mn tonnes of cargo capacity this year, offering partial insulation from maritime disruption.

What was left of the Western alignment is already fraying. Spain has said it will veto any Nato role in securing the Strait of Hormuz, with Foreign Minister José Manuel Albares stating the waterway falls “outside Nato’s mandate”. Country after country is backing away from the Trump administration administration in its frustration to force an end to the conflict.

EU governments have opened direct talks with Tehran to find compromises. Last week French President Emmanuel Macron negotiated a permits-for-passage for the first French container ship to pass through Strait of Hormuz and Italy’s Prime Minister Giorgia Meloni toured the region looking for similar deals.

Now the situation has become very fluid. Trump threatened on April 13 to fire “targeted missile strikes” against Iran if the naval blockade was ignored. Khamenei responded that Iran would simply resume its attacks on economic assets throughout the region if that happened. Trump is running out of options.