Introduction: Strait of Hormuz Remains Open Despite Rising Tensions

Despite mounting concerns over escalating tensions in the Middle East, Eni CEO Claudio Descalzi has indicated that the closure of the Strait of Hormuz remains unlikely under current oil market conditions. Speaking after Israel’s recent airstrikes on Iranian military sites, Descalzi emphasized that while geopolitical risks have increased, market signals don’t point toward imminent large-scale disruption.

The Strait of Hormuz, a narrow but vital chokepoint connecting the Persian Gulf to the Arabian Sea, is responsible for the transit of nearly 20% of global oil trade. Any threat to this route instantly raises alarms for energy security, yet Descalzi believes market calmness suggests minimal risk of closure.

Oil Prices Signal Market Stability

According to Descalzi, the price of Brent crude oil—a global benchmark—remained below $90 per barrel, even after a 4% spike earlier in the week. On Wednesday, Brent traded near $76.6, signaling that traders do not currently expect a catastrophic supply disruption, such as the shutdown of the Hormuz Strait.

Key Points:

• Brent crude stable at $76.6 per barrel after a temporary increase.

• Traders showing measured response to geopolitical news.

• Oil futures not pricing in worst-case scenarios like Strait closure.

Descalzi: “Closing the Strait Would Hurt Iran, Too”

Descalzi noted that while Iran has previously threatened to block the Strait in response to Western sanctions and regional conflict, such a move would be counterproductive for Tehran. Iran itself relies heavily on the Strait to export its own crude oil.

“Closing the Strait of Hormuz would damage Iran as much as the West,” Descalzi said, highlighting that such an escalation would likely trigger U.S. military intervention, something most regional actors want to avoid.

Why the Strait of Hormuz Is So Important

The Strait of Hormuz is one of the world’s most strategically significant waterways:

• Handles about 20 million barrels of oil per day.

• Critical route for Qatar’s liquefied natural gas (LNG) exports.

• No viable alternative exists for Gulf oil exporters in the short term.

Despite tensions between Israel and Iran, analysts note that actual disruptions are rare due to mutual dependencies and international deterrence mechanisms.

Geopolitical Context: June 13 Strikes on Iran

On June 13, Israel launched strikes targeting Iranian military infrastructure, sparking fresh fears of broader conflict in the region. Though Iran has issued verbal warnings and condemnation, no retaliatory military response has escalated to the point of threatening global shipping routes—yet.

Descalzi’s comments help calm market nerves, reinforcing that energy-sector players view the risk as contained for now.

Eni’s Green Energy Expansion Gains Momentum

While commenting on oil prices and regional risks, Descalzi also highlighted Eni’s strategic shift toward renewable energy and biofuels. The Italian energy giant is seeking to reduce dependence on oil and diversify its portfolio in line with global sustainability goals.

Plenitude Stake Sale

• Eni plans to sell a 20% stake in its green energy unit Plenitude.

• Expected to raise approximately €2 billion by the end of 2025.

• Talks ongoing with Ares Alternative Credit Management, a key private investor in alternative energy and infrastructure.

This move underlines Eni’s ambition to position itself as a major player in the clean energy transition, even as it remains a significant actor in the oil and gas markets.

Market Implications: What Investors Should Watch

1. Oil Price Volatility

Investors should keep an eye on fluctuations in oil prices. While the market is stable for now, any sudden action by Iran or Western powers could shift dynamics quickly.

2. Security of Shipping Lanes

The U.S. Navy and international allies have historically patrolled the Strait of Hormuz to ensure freedom of navigation. Their continued presence will be critical in maintaining global oil supply routes.

3. Renewable Energy Strategy

Eni’s commitment to selling a stake in Plenitude and expanding its clean energy footprint could boost investor confidence and align with ESG-focused portfolios.

Conclusion: Risk Remains Low But Vigilance is Essential

Claudio Descalzi’s insights offer reassurance amid heightened geopolitical uncertainty. While the Israel–Iran tensions remain serious, the market behavior and strategic interests of regional players suggest that a closure of the Strait of Hormuz is unlikely in the near term. Simultaneously, Eni’s continued push into renewables and biofuels indicates a strong pivot toward a low-carbon future.

Investors, policymakers, and energy analysts alike will continue to monitor the situation closely—but for now, stability prevails in one of the world’s most critical energy corridors.

FAQs

1. What is the Strait of Hormuz and why is it important?
The Strait of Hormuz is a narrow waterway between the Persian Gulf and the Arabian Sea, through which about 20% of the world’s oil passes. It is a critical route for energy exports from Gulf countries.

2. Why would Iran consider closing the Strait?
Iran has previously threatened to close the Strait in response to Western sanctions or regional military actions. However, doing so would also hurt its own economy and trigger international military responses.

3. What did Eni’s CEO Claudio Descalzi say about the Strait closure?
Descalzi stated that current oil prices and market behavior suggest that a Strait of Hormuz closure is unlikely, even amid rising regional tensions.

4. What is Eni doing to reduce its oil dependency?
Eni is expanding into renewables and biofuels. It plans to raise €2 billion by selling a 20% stake in its green energy unit, Plenitude.

5. Are oil prices expected to spike soon?
Not at the moment. Brent crude remains under $90 per barrel, suggesting that traders do not expect an immediate disruption in global oil supply.