Crypto Market at Risk as U.S.–Iran War Threatens Inflation With Oil Price Surge

A U.S.–Iran war could have significant implications for the crypto market, especially if Iran were to close the Strait of Hormuz, which serves as a pathway for up to 20% of the total global oil supply. Rising oil prices typically have a negative impact on inflation, a move which could further delay rate cuts and put more downside pressure on crypto prices.

Analyst Flags How A U.S.–Iran War Could Impact Global Liquidity

In an X post, market analyst Ted Pillows noted that a move to close the Strait of Hormuz amid the rising tensions would be a liquidity event as roughly 20% of global oil flows through that path. He warned that shutting it down would cause energy prices to surge.

Notably, oil prices had surged to as high as $72 per barrel yesterday, even prior to the ongoing U.S.–Iran war, which began with airstrikes today. This marked the highest price level since July 31, 2025, just over a month after Israel attacked Iran back then.

Pillows stated that rising oil prices translate to an inflation shock, which in turn leads to liquidity constraints for central banks and ultimately puts risk assets under pressure. The analyst also mentioned that equities will reprice if this happens, with the high beta assets bleeding first before leverage gets punished.

This pressure on risk assets is also likely to spill over to crypto assets, with prices at risk of a further decline. Notably, the crypto market crashed earlier today as the U.S.–Iran war escalated with strikes from Israel and the U.S. before retaliatory strikes from Iran.

Meanwhile, Pillows noted that rising oil prices and the inflation shock that could follow don’t mean that an instant collapse would happen. Instead, he explained that it means volatility expansion and forced positioning, and that could take months before the recession risk becomes real.

Expert Says Iran Unlikely To Close the Strait of Hormuz

Economist Daniel Lacalle noted that Iran has never been able to close the Strait of Hormuz, suggesting that the U.S.–Iran war is unlikely to change that. He also mentioned that almost 80% of the traffic goes to China, which is Iran’s largest partner. As such, closing this pathway will just be Iran shooting “itself in the foot.”

Furthermore, Lacalle explained that Iran’s production is currently 3.3 million barrels daily, but it exports only 1.5 million, most of which goes entirely to China. As such, he believes that other OPEC members could quickly offset any production disruption, a move that could keep oil prices steady.

It is worth noting that U.S. inflation is already on the edge, with the recent PPI and PCE inflation data showing that inflation is trending towards 3% at the moment, well above the Fed’s 2% goal. As such, a U.S.–Iran war risk sending inflation past the 3% mark, which could ultimately delay rate cuts, a development that could negatively impact crypto prices.

Renowned economist Peter Schiff also raised concerns about how tensions between the U.S. and Iran could worsen the state of the economy. This came as he noted that the U.S. economy and labor market were already weakening while inflation was strengthening.