Iran’s closure of the Strait of Hormuz and the threat to fire on passing vessels is disrupting global oil and gas flows, raising shipping costs and extending transit times by 10–12 days for Persian Gulf exports. The escalation has pushed Mexico’s crude benchmark to an eight-month high, boosting potential federal petroleum revenues by MX$10.7 billion (US$618 million) per US$1 increase in oil prices, while also affecting freight-dependent industries. Mexican energy, logistics, and trade sectors are exposed to higher costs and longer supply chains, underscoring the intersection of international conflict with domestic fiscal and market stability.

Iran declared the Strait of Hormuz closed on March 2, warning it would fire on any ship attempting to pass, a move that risks disrupting roughly a fifth of global oil trade and sending energy prices higher. “The strait is closed. If anyone tries to pass, the heroes of the Revolutionary Guards and the regular navy will set those ships ablaze,” Ebrahim Jabari, Senior Adviser to the Guards’ Commander-in-Chief, said.

The strait, about 33km wide at its narrowest point, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. It carries around 20% of daily global oil consumption and a fifth of worldwide liquefied natural gas shipments. The closure followed United States and Israeli strikes on Iran on Feb. 28. In response, Tehran fired missiles at Gulf neighbors hosting US bases, including Qatar, Kuwait, and Bahrain, as well as at Saudi Arabia, Oman, and the United Arab Emirates. Iran has previously threatened to block the strait in retaliation for attacks on the country.

“Of all the possible Middle East scenarios, the current state of play is one of the worst for the global economy,” said the Commonwealth Bank of Australia’s Head of Global Economics, Joseph Capurso.

How the Strait Closure Could Impact Mexico

The closure of the Strait of Hormuz is expected to raise maritime shipping costs and extend transit times for energy shipments. Oil and gas cargoes from the Persian Gulf to Europe and Asia could take 10 to 12 days longer than usual, according to Fernando Con y Ledesma, President, the Mexican Association of Ship Agents (AMANAC).

“Shutting the Strait of Hormuz will push freight rates higher, similar to the surge seen in 2020 when global trade was disrupted by the COVID-19 pandemic,” Con y Ledesma said. He noted that longer voyages and higher navigation expenses will directly increase shipping tariffs, while a significant share of crude and other cargo may need to reroute to avoid the conflict zone.

The escalation has already influenced Mexican oil markets. Following US and Israeli military strikes on Iran, Mexico’s crude oil benchmark rose to its highest level in eight months, trading at levels not seen since July 2025. This represented a 5% increase compared with the price on Feb. 27.

Rising oil prices have important implications for Mexico’s public finances. The Finance Ministry estimates that a US$1 increase in the annual average crude price would add MX$10.7 billion ( US$618 million) to federal petroleum revenues. The government also maintains a system of fuel tax subsidies, or fiscal incentives, designed to mitigate the impact of sharp price swings on domestic energy costs.

Sheinbaum highlighted that weekly meetings with the Finance Ministry allow the government to track energy market developments closely. “We review various issues, including this one, and so far there are no problems for our country,” she said, signaling confidence in Mexico’s ability to manage the immediate effects of the regional conflict.

Global Economic and Energy Impact

After the US-Israel attack on Iran, oil markets reacted immediately. Brent crude jumped as much as 13% to US$81.57/b on March 2, the highest in over a year, before easing to US$77.53/b by afternoon, a 6.4% increase on last week. Asian stock markets recovered from early losses but remained down 1.5%, while Australian shares ended slightly higher, driven by gold miners and LNG exporters.

UBS analysts noted that a full physical closure would be difficult but disruption could still force shipping companies and insurers to avoid the crossing. “We could be looking at a material disruption, potentially of a greater magnitude than the recent loss of Russian supply in 2022, which sent spot prices to (over) US$120/b,” they wrote. They also said Iran’s oil exports are vital to its economy, making a complete closure less likely except as a last resort.

Rising oil prices would have direct consequences for households and economies. Johnathan McMenamin, Head of Economic Forecasts, Barrenjoey, said, “It is generally stagflationary. It increases inflation directly through high bowser prices but it can spill over into broader prices. At the same time, it tends to reduce growth through a reduction in the people’s ability to spend.”

Richard Yetsenga, Chief Economist, ANZ, highlighted regional consequences. Many Asian countries, including Japan, South Korea, Taiwan, Singapore, and Hong Kong, import more than 80% of their domestic energy. Thailand has already banned petroleum exports and activated a national fuel fund to shield motorists from rising costs.

China remains a major buyer of Iranian oil, importing nearly all of the 1.6MMb Iran exports daily, about 13% of China’s total seaborne oil imports. Iran continued loading tankers over the weekend, signaling crude shipments may continue even as other shipping slows.

An extended closure of the Strait of Hormuz could affect Europe, where energy inventories remain low. Citi analysts warned that European wholesale gas prices could triple to US$100/MWh if the strait closes entirely for three months, or operates at half capacity for six months. Sustained disruption could drive non-linear price escalations and broader inflationary consequences.