Hamid Mollazadeh
Following the US and Israeli military strikes on Iran and Tehran’s declaration that navigation through the Strait of Hormuz is closed, the global energy supply chain has entered a state of suspension at one of the world’s most critical chokepoints.
Trading sources said on Sunday that several tanker owners, oil majors and commodity trading houses have halted shipments of crude oil, refined fuels and liquefied natural gas (LNG) through Hormuz. “Our ships will stay put for several days,” a senior executive at one of the world’s largest trading desks said bluntly—a remark that encapsulates the scale of operational and financial risk now confronting the market.
Satellite imagery from vessel-tracking services shows tankers idling near major regional ports, including Fujairah in the United Arab Emirates, rather than transiting the narrow waterway.
Fujairah, a key storage and transshipment hub located outside the Hormuz Strait, typically serves as a logistical buffer for the Persian Gulf crude exports. It has now effectively become a waiting zone for vessels awaiting clarity on the security situation.
An official from the European Union naval mission EUNAVFOR Aspides said multiple ships in the area received VHF transmissions from forces affiliated with Iran’s Islamic Revolution Guards Corps stating that “no ship is allowed to pass through the Strait of Hormuz.”
At the same time, the British Navy described Iran’s directives as “not legally binding” and advised vessels to transit with caution. This legal-security duality—conflicting interpretations of authority and risk—is precisely the gap through which insurance premiums, freight rates and capital costs begin to surge.
Cross-Warnings and Expanding Risk
The tanker association INTERTANKO reported that the US Navy had warned against navigation across the broader region—including the Persian Gulf, Gulf of Oman, North Arabian Sea and the Strait itself—stating it could not guarantee the safety of commercial shipping.
Shipbroker Poten & Partners noted in a client update that while vessel traffic has not completely stopped, disruptions are rapidly accumulating. In practical terms, the market is entering what traders describe as a “friction phase”: each transit becomes more expensive, slower and riskier than the last.
Japanese shipping companies have also suspended operations in and around the Strait. Nippon Yusen instructed its vessels to halt transit in the area. Mitsui O.S.K. Lines said it is refraining from navigating through Hormuz Strait, emphasizing that the safety of crew, cargo and vessels is its “top priority.”
Meanwhile, Kawasaki Kisen confirmed that several of its ships in the Persian Gulf are on standby, noting that unlike other maritime thoroughfares, there are no meaningful diversion options for shipments reliant on Hormuz.
That final point underscores the Strait’s structural importance: there is no immediate operational substitute for the volumes that pass through this narrow corridor.
Hormuz: The 20% Chokepoint
The Strait of Hormuz, a narrow waterway between Iran and Oman, handles roughly $500 billion worth of global energy, along with substantial volumes of LNG. This share makes it one of the busiest and most strategically sensitive energy chokepoints in the world.
Even temporary disruption quickly reverberates across tanker freight indices—including VLCC and Suezmax rates—war risk insurance premiums, regional price spreads and energy derivatives markets.
Historical precedent shows that geopolitical risk at such chokepoints tends to have a multiplier effect: paper markets react first, physical markets follow with greater force and delay.
Although maritime traffic has not come to a complete standstill, corporate behavior suggests that “precautionary suspension” is fast becoming the norm. Trading desks are opting to wait days or even weeks before resuming transit, particularly given contradictory signals regarding the legal enforceability of Iran’s warnings and the actual security threat on the water.
In this environment, even a minor incident—a drifting mine, navigational miscalculation or limited exchange of fire—could escalate into a chain-reaction event with outsized consequences for global supply.
Impact on Oil, LNG Markets
For crude markets, delayed transit translates into postponed Middle Eastern deliveries to Asia and Europe. Asian refiners heavily dependent on the Persian Gulf sour grades may be forced to draw down strategic or commercial inventories, or seek alternative crude slates—often at higher cost and with different sulfur and API specifications.
In LNG markets, disruption through Hormuz could unsettle delivery schedules to East Asia and push spot prices higher, particularly as seasonal demand dynamics shift and supply flexibility remains constrained.
