[US-IRAN ANALYSIS] US to impose a naval blockade on the Strait, whilst Trump threatens an Iranian nuclear facility

• US and Iran continued to strike each other for a third night, after President Trump warned that they would hit Iran “very hard”. POTUS also announced a naval blockade on all Iranian ports, which is set to begin at 21:00 BST / 16:00 EDT. Brent Aug’26 +1.9%.

TLDR:

• The US conducted more strikes on Iran, with explosions reported across various parts of the country; Kish Island, Qeshm Island, Bandar Abbas and Bushehr were all targeted.
• In response, Iran attacked a number of US military sites including in Kuwait, Bahrain and Jordan. Separately, the UAE stated that it struck two oil tankers on the Strait of Hormuz, and one sailor was killed.
• A blockade is now set to begin at 21:00 BST / 16:00 EDT, which will apply to all Iranian ports, but will not impede on neutral transits through the Strait.
• One growing risk comes after President Trump threatened to hit Iran’s “Pickaxe Mountain”, an underground nuclear facility.

Analysis: 

• The continued US-Iran strikes on each other are likely not driving the strength in the crude complex this morning, with traders likely focusing on a) the reinstated US-blockade on the Strait, and b) the threat of a strike at Iran’s nuclear facility.
• Starting with (a), geopolitical analysts viewed the first US blockade (13 Apr) as highly effective. It was seen to help put added pressure on the Iranian economy, as well as allowing the transits of other ships. However, there was not a material increase in transits during this period, given the ongoing threat of strikes on the ships.
• As for (b), the threat of a strike at Iran’s “Pickaxe Mountain” (Kuh-e Kolang Gaz La) is a clear escalation – if enacted, the risk of another round of fighting and extended Hormuz closure will be a key risk. Pickaxe Mountain is considered a heavily fortified underground nuclear facility, located south of Natanz. But do note that Iran has denied that the facility is used for nuclear enrichment; moreover, some analysts have noted that the facility is too deep to be bombed. This perhaps reduces the likelihood of such attacks taking place.
• Nonetheless, traders will be watching out for updates of strikes in proximity to Central Iran/Isfahan Province/Natanz/Zagros Mountains.