After Iran closed the Strait of Hormuz following US and Israeli attacks on February 28, commercial shipping and energy markets have been severely disrupted.
Brigadier General Ibrahim Jabbari warned that ships attempting to pass through the strait would be targeted. The closure has prompted the UK Maritime Trade Operations to raise the risk level to “critical”, and insurance companies have canceled war-risk policies for vessels in the region.
Shipping rerouted around Africa
Global container shipping companies including Hapag-Lloyd, CMA CGM, and Maersk have suspended passage through the Gulf and the Suez Canal, rerouting vessels via the Cape of Good Hope.
Ship traffic through the Strait of Hormuz dropped 90%, from an average of 138 ships per day to just 4–7.
Transit ships around the Cape of Good Hope increased by 35–112%, reflecting a surge in longer alternative routes.
Delivery times for goods are expected to increase by 10–20 days, with higher shipping costs.
Impact on oil and LNG markets
The Strait of Hormuz carries 20% of global oil supplies, with Asia receiving the largest share. Major exporters include:
Saudi Arabia: 5.1 million barrels/day
Iraq: 3.3 million
UAE: 2.6 million
Iran: 1.7 million
Oil production adjustments are already underway:
Iraq’s Rumeyla oil field stopped production due to tanker restrictions.
Saudi Arabia’s Yenbu Port is operating at 2.44 million barrels/day, far above its six-month average of 650–940 thousand barrels/day.
The disruption also affects liquefied natural gas (LNG):
Iran and Qatar reduced or halted production at key LNG facilities.
Analysts warn that US LNG exports may be redirected to Asia, tightening supply and storage in Europe.
Economic and geopolitical implications
Fitch notes that the closure may have a limited impact on oil prices in the short term, but Asia and global markets are already feeling the effects. The rerouting of shipping and delays in energy exports highlight how conflict in the Gulf can ripple across supply chains worldwide, affecting costs, delivery times, and regional trade balances.
Source: AA
