Iran's Hormuz Plan Rattles Markets as War Costs Hit $29 Billion

Iran's parliament is reviewing a “smart management” plan for the Strait of Hormuz, a move designed to use its geographic chokehold as strategic leverage while the cost of the US-Iran war climbs to $29 billion.

"The missile triad, the people and the Strait of Hormuz destroyed the product of 50 years of US efforts," Ebrahim Azizi, head of Iran’s parliamentary National Security and Foreign Policy Commission, said in comments carried by state broadcaster IRIB.

The proposal surfaces as regional tensions keep Brent crude oil futures above $107 a barrel and US consumer food prices show a 3.2 percent annual increase, according to the latest Labor Department data. The Pentagon's new $29 billion war cost estimate, up $4 billion in two weeks, includes equipment replacement and operational spending.

The plan, which could restrict passage for vessels from nations considered hostile to Iran, including Israel, seeks to formalize Tehran's control over the vital waterway. This challenges international norms of free navigation and creates persistent uncertainty for global energy markets long after the current fragile ceasefire, which began April 8, expires.

Pentagon Puts War Cost at $29 Billion

The rising financial toll of the conflict, which began February 28, was detailed in a House Appropriations defense subcommittee hearing. Pentagon Comptroller Jules Hurst said the cost had reached nearly $29 billion, attributing the $4 billion increase since late April to updated equipment repair and replacement costs and ongoing operational expenses.

At a separate Senate hearing, Defense Secretary Pete Hegseth faced questions about the administration's strategy. Lawmakers questioned the transfer of Terminal High Altitude Area Defense (THAAD) interceptor missiles from South Korea to the Middle East. Hegseth maintained the move was pre-planned, stating commanders had taken "every possible measure" to prepare for the war.

The conflict's unpopularity is a growing concern for Republicans ahead of midterm elections. President Donald Trump, however, stated that preventing Iran from acquiring a nuclear weapon is his only motivation, telling reporters, "I don’t think about Americans’ financial situation. Not even a little bit."

Inflationary Pressures Mount

The closure of the Strait of Hormuz, which handles about a fifth of the world's oil supply, is directly impacting consumers. US consumer inflation in April saw its largest gain in three years, with food prices a major contributor. Prices for food eaten at home rose 2.9 percent year-over-year, while overall food prices climbed 3.2 percent, the Labor Department reported.

Economists from Purdue University noted that the full impact of the energy shock on food prices may not be felt for another three to six months, as higher transport, processing, and packaging costs work their way through the supply chain.

The tensions have prompted international maneuvers. Italy announced it is moving two minesweepers closer to the strait as a "purely precautionary measure," while ruling out a new military mission without a definitive end to hostilities. Meanwhile, a Chinese crude oil tanker was seen transiting the strait, highlighting Beijing's ongoing interest in the region ahead of a summit between Trump and President Xi Jinping.

Iran's foreign ministry has also been active, holding talks with officials from Norway and Azerbaijan to discuss maritime safety and transit arrangements for the strait, signaling Tehran's intent to establish a new legal and operational order for the waterway.

This article is for informational purposes only and does not constitute investment advice.