Iran's supreme leader vows retaliation as oil traffic drops 80 percent

Iran's new supreme leader formally accused the US and Israel of assassinating his predecessor and vowed retaliation, deepening a crisis that has slashed Strait of Hormuz traffic.

Iran's Supreme Leader Mojtaba Khamenei on Saturday formally accused the US and Israel of killing his predecessor and vowed retaliation, deepening a standoff that has slashed Strait of Hormuz traffic by more than 80 percent from pre-war levels.

"Holding the United States and the Zionist regime accountable is the common demand of the Iranian people," Khamenei said in a statement carried by state media, according to a translation by China Central Television.

The escalation follows two days of US strikes that killed at least 14 people and wounded 78 across southern Iran, according to the country's health ministry. Traffic through the Strait of Hormuz — which handles about a fifth of global oil — fell to 22 vessels Thursday, down from a pre-war average of more than 120, data from the UN Conference on Trade and Development show. Brent crude traded at $76.39 a barrel Thursday, down 2.1 percent on the session but still above the $71.80 level before Iran attacked three commercial tankers earlier this week.

The standoff threatens to reverse a fragile recovery in global oil supply, which added 4.1 million barrels a day in June to reach 98.8 million, according to the International Energy Agency. With Iran's missile stockpiles rebuilt to about 50 percent of pre-war levels, according to former US National Security Adviser H.R. McMaster, and President Donald Trump warning he has "1,000 missiles locked and loaded," the risk of a broader conflict that could choke off Persian Gulf energy exports remains elevated.

Strait of Hormuz Becomes the Flashpoint

The waterway has emerged as the central battleground. Iran's Islamic Revolutionary Guard Corps has demanded all vessels use a northern route under its control and pay tolls — a claim the UN's International Maritime Organization rejected Friday, calling on its 176 member states not to recognize Iran's authority. The US has opened a southern corridor near Oman's coast, and NAVCENT said Friday it "remains available for all traffic."

Of the 22 vessels tracked through the strait Thursday, nine took Iran's northern route, six used the UN's central lane, one took the US southern corridor and six took an unknown path, according to Fox News data. The US has facilitated the transit of 825 commercial vessels since early May and almost 2,600 since an initial ceasefire on April 8, a senior US official said.

Markets Price a Return to Volatility

Global oil supply had been recovering — adding 4.1 million barrels a day in June — but the IEA said further recovery was contingent on de-escalation, a prospect now in doubt. Global oil inventories rose in June for the first time since February, adding 21 million barrels, led by a 41 million barrel increase in China's supply.

The S&P 500 rose 0.7 percent Thursday as investors weighed the risk of a return to full-scale war against Trump's signal that talks would continue. "They want to make a deal so badly," Trump told reporters, while also declaring the ceasefire "over."

Shipping giant Maersk announced Thursday it was restoring Red Sea routes after an 18-month suspension caused by Houthi attacks, a tentative sign that some trade lanes are normalizing. But the company warned it had "contingency plans in place" should the security situation deteriorate.

The last time Iran faced a leadership succession amid active conflict was the 1989 death of Ayatollah Khomeini, which preceded a period of relative calm. The current transition — with Khamenei's son Mojtaba assuming power after his father's killing on the first day of US-Israeli strikes — carries no such precedent, and his vow of retaliation suggests the Islamic Republic is doubling down on its founding ideology of non-compromise with the US.

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