NextFin News - Iran's hard-line new security chief has threatened to treat any neighbor that joins Washington's economic campaign against Tehran as an enemy, warning that Iranian forces would strike not only the Strait of Hormuz but also the alternative oil-export routes those neighbors have built to bypass it. Mohsen Rezaei, appointed this month as secretary of Iran's Supreme National Security Council, said in a televised interview aired Saturday that if countries around Iran cooperate with the Americans in the economic war, "not a drop of oil will leave through the Strait of Hormuz, and we will also target other routes through which oil is exported." The threat widens the blast radius of a conflict that has already kept the waterway — through which roughly one-fifth of the world's oil normally flows — effectively closed to normal commercial traffic for almost six months, and it arrives with Brent crude near $94 a barrel, roughly 40% above its level a year earlier.
The Threat: From Closing a Strait to Targeting Neighbors
The central fact of the Middle East energy crisis has been the closure of the Strait of Hormuz to normal commercial traffic since the U.S.-Israeli campaign against Iran began on Feb. 28. Rezaei's statement changes the geometry of the threat. Gulf neighbors that cooperate with what he called the U.S. "economic war" would be "considered an enemy," and their interests — including oil-shipping routes out of the Persian Gulf that bypass Hormuz — would be targeted.
"If Trump wants to take action, we will retaliate in an earthquake-like manner," Rezaei said in the interview with state broadcaster IRIB, his most extensive public statement since his appointment.
The appointment itself is part of the signal. Supreme Leader Mojtaba Khamenei named Rezaei to the security council on Aug. 9, replacing Mohammad Bagher Zolghadr, and also designated him the supreme leader's personal representative to the body. At 71, Rezaei is a former commander-in-chief of the Islamic Revolutionary Guard Corps and a veteran of the eight-year Iran-Iraq War — a wartime commander, not a technocrat, taking charge of Iran's security strategy more than five months into the conflict. Analysts have read the move as a hardening of Tehran's stance for the next phase of confrontation and negotiation.
President Donald Trump, for his part, has vowed in the past week to increase Iran's pain by imposing an "unprecedented" level of economic warfare and isolation. The exchange marks an escalation of the economic front: Washington is attempting to isolate Iran financially, and Tehran is responding by making that isolation expensive for the states standing alongside Washington.
The strategic backdrop is the transformation of the strait itself. Iran asserted control over the waterway shortly after the U.S. and Israel attacked on Feb. 28. Rezaei said discussions with Oman, which sits on the strait's opposite shore, over management of the passage were ongoing and that fees would be imposed. The toll claim has already drawn a U.S. response: the Treasury Department's sanctions office warned in May that payments to Iran for safe passage carry sanctions risk, and later sanctioned the "Persian Gulf Strait Authority" that Iran established to coordinate traffic and collect fees. Secretary of State Marco Rubio said on Aug. 3 that ships and oil were already moving through the strait, but subsequent Iranian attacks on commercial vessels and the expiry of a transit understanding have cast doubt on that claim.
There are signs of limited, managed traffic. The governments of Iraq and Iran said Tehran has helped some ships carrying Iraqi oil transit the strait. Iraqi President Nizar Amidi said "there is facilitation for some ships carrying Iraqi oil in the Strait of Hormuz," adding that Iraq lacks a national carrier for transporting oil. Iran's state news agency said a number of Iraqi oil tankers have been permitted to transit, though it was not clear how many or what Tehran received in return.
Diplomacy is moving on parallel tracks. Egypt's foreign ministry said its top diplomat and Iranian Foreign Minister Abbas Araghchi discussed efforts to bring Tehran and Washington back to the negotiating table to settle the war, as well as the Iranian-Omani talks on the strait. Araghchi separately spoke with Pakistan's army chief, Field Marshal Asim Munir. And French President Emmanuel Macron and Saudi Crown Prince Mohammed bin Salman were expected to discuss developing alternative routes to the Strait of Hormuz during the Saudi leader's two-day visit to Paris beginning Sunday.
Regional violence continued alongside the diplomacy. Israel carried out strikes in Syria and Gaza on Saturday; an Israeli drone strike on a vehicle wounded one person in the southwestern Syrian village of Beit Jin, according to Syrian state media, which called the strike a flagrant violation of sovereignty. The Israeli military said it targeted a "terrorist who advanced terror attacks in final stages of preparation." In a separate diplomatic friction, U.S. Ambassador to Israel Tom Barrack said in a Friday interview that Israel "still" occupies the Golan Heights in violation of U.N. resolutions, prompting Israeli Defense Minister Israel Katz to call the remarks "full of inaccuracies and positions that contradict Trump's own position."
Why the Threat Lands Differently This Time
The significance of Rezaei's statement is not that Iran can close Hormuz — markets have priced that risk for months. The significance is that the threat extends the cost of alignment with Washington onto Gulf states that have tried to stay out of the direct line of fire. The mechanism is a divergence of interest. For the United States, the objective is maximum pressure on Tehran. For Saudi Arabia, the UAE, Kuwait and Iraq, the objective is keeping oil flowing and avoiding becoming a battlefield. Rezaei is telling those capitals that the infrastructure they built to reduce dependence on Hormuz does not grant them immunity.
The market has already begun to reprice that risk. Brent crude rose to $94.39 a barrel on Aug. 21, up 0.65% on the day and 39.36% higher than a year earlier. U.S. West Texas Intermediate crude settled at $86.64 a barrel, down 0.22% on the day but still 36.10% above its year-ago level. Over the five trading days through Aug. 21, Brent gained more than 7% and WTI climbed more than 8%, reaching their highest levels since late July. Shipping through the strait remained slow, with most ship owners avoiding the waterway amid uncertainty over its reopening.
Cyclical Shock or Structural Regime Change?
The central question for markets is whether the Hormuz disruption is a cyclical shock that will mean-revert once fighting pauses, or a structural regime change in how Gulf energy reaches global markets. The evidence says both are operating at once — and confusing the two is the most common error in reading this crisis.
The cyclical leg is real, and history offers three clean precedents. In 1990, after Iraq invaded Kuwait, WTI crude rose 90% from early August to its October peak near $41 a barrel, then fell 31% between January and March 1991 once the outcome of the Gulf War became clear. In September 2019, the drone-and-missile attack on Saudi Arabia's Abqaiq processing facility and Khurais field knocked out 5.7 million barrels a day of production — about 5% of global supply — and sent Brent up as much as 19.5% in a single session; the price gave back the gains within roughly two weeks as production was restored. In the 2023-24 Red Sea crisis, Houthi attacks pushed Shanghai-to-Europe container rates up 256% between December and February and cut Suez transits by 42%, but the disruption was a rerouting shock, not a permanent closure: traffic adapted by sailing around the Cape of Good Hope. In each case, the price spike was violent and the reversal was swift once the physical or diplomatic outcome became clear.
The current episode fits that pattern in its price behavior: a risk premium that swells on escalation headlines and compresses on reopening hopes. The Iran-Oman negotiations over management of the strait offer a plausible path back toward normal traffic, and if a reopening protocol is verified and tanker movements return toward pre-conflict levels, the premium tied to closure fears should decay quickly. The physical infrastructure — the strait, the pipelines, the tankers — remains intact.
But the structural leg is deeper and more durable. Iran has asserted control over what was long treated as an international waterway, established an administrative body to manage traffic, and declared that passage will carry a fee. That is a change in the rules of the system, not merely a temporary interruption of flow. Even if fighting subsides, the precedent that Hormuz transit is subject to Iranian permission and payment does not simply disappear. The U.S. sanctions response — warning that toll payments carry sanctions risk — confirms that Washington views the toll regime as an enduring feature to be countered, not a wartime anomaly that will lapse on its own.
The distinction matters because it determines where the risk premium should sit. If the disruption is cyclical, the premium belongs in short-dated futures and should decay as diplomacy progresses. If it is structural, the premium belongs in the term structure of oil prices and in the cost of capital for any project that depends on Gulf transit — and it will not decay without a negotiated settlement that explicitly restores the strait's international status.
The Second-Order Consequence: Gulf States Hedge, Not Align
The first-order reading of Rezaei's threat is simple: higher oil prices, more risk. The second-order consequence is more important and less discussed. The threat raises the probability that Gulf states hedge diplomatically rather than align fully with Washington's maximum-pressure campaign.
The signals are already visible. Egypt is mediating between Tehran and Washington. Oman is negotiating directly with Iran over the strait. Saudi Arabia's crown prince is traveling to Paris to discuss alternative routes with France. Iraq is accepting Iranian facilitation for its oil tankers through the closed waterway. Each move is a form of diversification — not just of export routes, but of diplomatic exposure. For Gulf capitals, the calculus is that the United States may be able to impose pain on Iran from a distance, but Iran can impose pain on them directly.
This dynamic puts a ceiling on how far the U.S. economic-war strategy can go without regional buy-in. If Washington escalates pressure on Tehran, and Tehran responds by threatening Gulf infrastructure, the Gulf states bear a disproportionate share of the cost. That asymmetry gives them leverage over the pace and scope of the American campaign — and it gives Iran an incentive to keep the threat credible. The Strait of Hormuz was always Iran's strongest card; what has changed is that Tehran is now playing it against its neighbors as well as its enemies.
The Strongest Counter-Thesis
The strongest argument against the structural reading is that Iran cannot afford to keep Hormuz closed indefinitely. The Islamic Republic depends on oil revenue, and a permanently closed strait damages Iran's own customers — China, India, Turkey, Pakistan — as much as it damages its adversaries. On this view, the toll regime and the threats are bargaining chips, not a new operating model: Tehran wants the strait reopened on terms that recognize its role as manager, and once those terms are accepted, traffic will normalize and the premium will unwind.
That argument has force, and it is the base case for anyone betting on a diplomatic settlement. But it rests on an assumption the evidence undermines: that Iran's objective is revenue maximization. The appointment of Rezaei — a wartime commander with deep ties to the supreme leader and no technocratic mandate — suggests Tehran's priority is coercive leverage, not commercial optimization. A revenue-maximizing regime would reopen the strait quickly and quietly. A leverage-maximizing regime keeps the threat alive, charges fees selectively, and uses the chokepoint as a permanent instrument of statecraft.
The falsifying signal is observable. If a verified Iran-Oman reopening protocol is implemented and commercial tanker traffic through Hormuz returns to more than 80% of its pre-February-28 level for two consecutive weeks, the structural regime-change thesis is wrong. Conversely, if Gulf states begin paying the Iranian tolls — or if toll collections under the sanctioned authority are documented — the regime-change thesis is confirmed, and the market will need to reprice the term structure of oil accordingly.
Outlook: Three Time Horizons
In the near term, diplomacy dominates. The Iran-Oman talks on strait management are the single most important variable for oil prices over the coming weeks. A verified reopening would trigger a swift retracement in the risk premium; a breakdown would push Brent toward three-digit territory. Goldman Sachs analysts, in a market report circulated through Sprague Energy's research desk, have projected Brent could surpass $120 a barrel in the fourth quarter and average $100 a barrel next year if flows through the Strait of Hormuz remain disrupted and Gulf output only fully recovers by the end of 2027.
Over the medium term, the question is whether Gulf states accept Iranian management of the strait or build alternatives. The Saudi-French discussions on alternative routes, the UAE's existing pipeline capacity to the Gulf of Oman, and Iraq's dependence on Iranian facilitation all point in different directions. The likely outcome is a hybrid: some traffic returns through a negotiated Hormuz arrangement, while Gulf states accelerate investment in routes that bypass the strait entirely.
Over the long term, the structural question will be settled by the postwar order in the Gulf. If the settlement explicitly restores the strait's status as an international waterway with guaranteed passage, the pre-2026 regime returns. If it codifies Iranian management and tolling, the global oil market absorbs a permanent increase in transit risk — and in the price of every barrel that passes through the Gulf.
The asymmetry for investors is clear. The exposed are the oil-importing economies and the shipping and insurance sectors that price Gulf risk daily. The relative beneficiaries are producers outside the Gulf and the infrastructure that allows Gulf states to route around the strait. This is a map of where the risk sits, not investment advice.
Rezaei's threat is not new military capability — it is the conversion of geography into leverage. And by aiming that leverage at Iran's neighbors, Tehran has raised the price of America's economic war for everyone in the region.
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