Oil Surges as US Warns Iran Could Close Strait of Hormuz for Months

Geopolitical risk is surging as CNN reports US intelligence assessments warning that Iran could keep the Strait of Hormuz closed for one to six months, sending shockwaves through energy and currency markets. The Defense Intelligence Agency assessment, citing four sources, highlights that US officials privately acknowledge reopening the critical waterway lacks a clear solution. The Strait of Hormuz handles approximately 20% of global oil supply, and a prolonged closure would dramatically escalate energy prices and amplify inflationary pressures worldwide. Oil-sensitive currencies such as CAD and NOK stand to benefit, while energy-importing nations' currencies like JPY and EUR face headwinds from rising import costs. The USD is likely to see safe-haven inflows amid the escalating conflict uncertainty. Traders should monitor USD/CAD for potential downside as crude rallies, while USD/JPY could see upward pressure as risk aversion and energy costs weigh on the yen. This development significantly raises the geopolitical risk premium across all major forex pairs.