Circle Squared Different Investments founder Jeff Sica reacts to the markets following the U.S. profitable strikes on Irans key nuclear weapons services.
Iran threatened to try to shut one of many world’s most vital transport lanes for oil in response to the U.S. becoming a member of Israel in attacking Iranian nuclear services, however U.S. vitality manufacturing would restrict the affect of such a transfer on the American economic system.
Iranian state media steered the nation’s parliament authorized a possible plan that will see Iran’s navy try to shut the Strait of Hormuz utilizing sea mines, anti-ship missiles or different measures in pursuit of that objective. The Trump administration introduced on Monday a possible ceasefire between Israel and Iran, which may deliver the battle to a halt after 12 days of strikes.
About one-fifth of the world’s every day consumption of oil strikes via the Strait of Hormuz every single day on tankers, and with the straight lower than 30 miles throughout, transport site visitors can be weak to potential threats from Iran. Moreover, about one-fifth of the worldwide liquefied pure gasoline commerce additionally went via the Strait of Hormuz in 2024, in keeping with the Power Data Administration (EIA).
Amid the potential threats to vitality provides within the Strait of Hormuz, home vitality manufacturing within the U.S. has helped cut back the reliance of the American economic system on vitality sourced from the Center East, insulating it from potential value shocks and potential worst-case eventualities during which surging oil costs may stifle the economic system.
IRAN MULLS CLOSING THE STRAIT OF HORMUZ AS RETALIATION: HOW IT COULD AFFECT GLOBAL SHIPPING, ECONOMY
Iran’s navy has threatened to shut the Strait of Hormuz in occasions of regional tensions through the years. (Photograph by Morteza Nikoubazl/NurPhoto by way of Getty Photographs / Getty Photographs)
“The doomsday situation, like should you shut down oil [shipments] within the Strait of Hormuz, predictions that go as much as $100 a barrel is likely to be true in a world the place you would really shut down the Strait of Hormuz,” Phil Flynn, a senior market analyst on the Worth Futures Group and FOX Enterprise contributor, mentioned in an interview.
“Proper now, I do not suppose that the market believes that that is potential,” Flynn mentioned. “Iran in all probability will not have the flexibility to close down the Strait of Hormuz. In the event that they had been capable of shut it down for a measurable period of time, it may have a significant affect. However I believe this train that we simply went via exhibits it is much less possible they’re going to be capable to shut it down.”
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The U.S. navy carried out strikes towards Iranian nuclear services on June 21, 2025. (Fox Information / Fox Information)
Flynn went on to say that U.S. vitality manufacturing has risen during the last decade and now produces greater than it consumes – a stark distinction to the previous when the U.S. relied closely on vitality from the Center East.
“The U.S. is producing a document quantity of oil,” Flynn mentioned, noting that in the course of the Islamic Revolution and Iranian hostage disaster in 1979, the U.S. was far more depending on oil from the Center East. “At the moment, had they shut down the Strait of Hormuz, it might have been a devastating blow not solely to our economic system, however the international economic system.”
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The Strait of Hormuz is a vital chokepoint for international vitality provides. (Reuters/Hamad I Mohammed / Reuters)
“Right here we’re years later and though it is vital – we’re nonetheless seeing 20% of the worldwide provide undergo the Strait of Hormuz every day – it isn’t almost as giant because it as soon as was, and the U.S. shouldn’t be as depending on it as we had been. The truth is, plenty of that oil goes to China, which could be very depending on provides going via the Strait of Hormuz,” Flynn mentioned.
Information from the EIA exhibits that in 2024, the U.S. exported a record-high 30.9 quadrillion British thermal models, a rise of 4% from the prior 12 months, whereas vitality imports had been flat at 21.7 quads. That left the U.S. with web exports of 9.3 quads – the very best recorded degree of web exports within the company’s data relationship again to 1949.
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“The buffer that we have constructed due to the U.S. vitality manufacturing has modified a few of these doomsday eventualities. You may’t underplay the likelihood that if the strait did get shut down, it might trigger a significant value spike,” he mentioned. “Now, it is getting tougher to think about a situation the place that is going to be potential for an prolonged time frame.”