“Iran proposes a plan → the U.S. is reviewing it → talks are going well → a deal is close” — this pattern has been repeating for weeks now, but nothing fundamentally changes. The Strait of Hormuz remains effectively blocked, fueling fears of what some are calling the worst energy crisis in history as oil prices skyrocket.
And this might not even be the worst of it. In case the U.S. begins a ground operation against Iran, Iran could respond by attempting to block the Bab el-Mandeb Strait, a route that handles about 12 percent of global maritime trade. Additionally, Tehran could target the East–West oil pipeline and the port of Yanbu.
But commodities supply isn’t the only pressure point.
Iran could also potentially disrupt the global internet by damaging undersea data cables in the Strait of Hormuz, a critical link connecting Europe and Asia. For instance, in 2024, in the Red Sea, four of more than 15 telecom cables linking Europe, Asia, and Africa were damaged, causing major internet disruptions, particularly affecting Gulf countries and India, and resulting in significant multi-billion-dollar economic losses.
Now, although the world would not go into a complete internet blackout, major infrastructure projects like Trump’s multi-billion-dollar Stargate initiative could be delayed or derailed. Tech giants such as Google, Amazon, and Microsoft could face disruptions if their regional data centers lose connectivity, potentially leading to service outages.
The financial sector would also feel it. Stock exchanges in Dubai and Abu Dhabi rely on low-latency connections, and even small delays could bring trading to a halt.
One company that might benefit is SpaceX. Increased demand for satellite internet services like Starlink could give it a boost, especially with Elon Musk’s upcoming SpaceX IPO.
Overall, the situation still has plenty of room to escalate. However, given the U.S. president's declining approval ratings, a major escalation seems unlikely, and negotiations, even if slow and unproductive, remain the preferred path.
For now, markets are pricing in this exact scenario, even if there is no near-term solution, at least no major escalation. The issue is that the impact of a blocked Strait of Hormuz would build up over time and hit globally, not just in the U.S. Against that backdrop, central banks may have to delay interest rate cuts, so don’t expect much positive news from this week’s meetings.