Iran announced the temporary closure of the Strait of Hormuz on Tuesday for live-fire drills, a rare show of force occurring simultaneously with indirect nuclear talks with the United States. The unprecedented move in the vital oil waterway has triggered immediate alerts for global shipping giants and U.S. defense contractors as regional tensions escalate.
A ‘Slap’ To The US Military
During the maritime exercises, Iranian state media reported the launch of live missiles toward the strait, citing “safety and maritime concerns” as per a report by Associated Press. Supreme Leader Ayatollah Ali Khamenei punctuated the military display with a severe warning to Washington.
“The strongest army in the world might sometimes receive such a slap that it cannot get back on its feet,” Khamenei stated, according to state television. He further cautioned the U.S. against attempting to “force the result of talks in advance” while bolstering its military presence in the Middle East.
Markets On Alert
The closure of a passage that handles 20% of the world’s oil has placed tanker companies and defense stocks under intense scrutiny. As of Wednesday, Feb. 18, Brent crude is trading at approximately $67.63 per barrel, up 0.31%, while West Texas Intermediate is hovering near $62.40 per barrel, higher by 0.22%.
Both benchmarks remain near two-week lows as markets balance concerns over the temporary closure of the Strait of Hormuz against emerging optimism from indirect U.S.-Iran nuclear talks.
- Shipping Risks: Tanker giants Frontline PLC (NYSE:FRO) and DHT Holdings Inc. (NYSE:DHT) are on high watch as maritime experts warn that any strike on Iran would have a global impact on shipping routes.
- Defense Demand: U.S. contractors Lockheed Martin Corp. (NYSE:LMT) and RTX Corp. (NYSE:RTX) may see increased demand for missile defense and naval replenishment as the U.S. Navy deploys the USS Gerald R. Ford strike group to the region.
Diplomatic Paradox
Despite the military friction, Iranian Foreign Minister Abbas Araghchi expressed optimism at a U.N. disarmament conference in Geneva, claiming a “new window has opened” for a sustainable solution.
However, U.S. Vice President JD Vance noted that while some progress was made, Iran remains unwilling to acknowledge certain “red lines” set by the Donald Trump administration.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: bella1105 on Shutterstock.com
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