The partial closure of the Strait of Hormuz, a critical artery for global energy supplies, is already disrupting trade routes and driving up prices. Even if shipping lanes reopen quickly, experts warn that the logistical fallout from the disruption will likely linger for months, impacting supply chains far beyond the immediate region. The crisis, triggered by escalating tensions following US-Israeli actions against Iranian interests beginning February 28, underscores the fragility of global commerce and the potential for geopolitical events to rapidly reshape economic realities.
The immediate impact is a significant backlog of vessels. Approximately 2,000 ships are currently stranded in the region, according to the International Maritime Organization (IMO), with around 400 positioned in the Gulf of Oman awaiting clearance to proceed. Many companies are diverting shipments, adding considerable time and expense to deliveries. Some are opting for the longer route around the Cape of Good Hope, while others are rerouting through the Suez Canal, creating bottlenecks and increased demand on those alternative pathways. Oil shipments from Saudi Arabia, a major global supplier, are being diverted through the Red Sea, a temporary fix that adds to the complexity of the situation.
The Logistical Bottleneck: A Months-Long Recovery
The reopening of the Strait of Hormuz won’t be a simple return to normal. “When the war is officially over, and the bombardments are stopped, that does not mean that the war is over for logistics, because then the real work starts,” explained Nils Haupt, senior director for corporate communications at the German shipping giant Hapag-Lloyd. He anticipates a surge of vessels attempting to access ports in the Persian Gulf, creating a substantial disruption to both inbound and outbound supply chains. Clearing this backlog will require a coordinated effort and, crucially, time.
Svein Ringbakken, managing director of the Norwegian Shipowners’ Mutual War Risks Association, echoed this sentiment, stating that even with maximum capacity at logistics facilities, months will be needed to process the accumulated backlog of oil, gas, and other goods. The situation is further complicated by damage to energy and transport infrastructure across the Middle East. The International Energy Agency (IEA) reports that more than 40 energy assets in the region have sustained “severe or incredibly severe” damage, leading companies like QatarEnergy, the Kuwait Petroleum Company, and Bahrain’s Bapco Energies to declare force majeure due to production disruptions.
Beyond Immediate Disruption: A Shift in Risk Assessment
The crisis extends beyond the immediate logistical challenges. SV Anchan, chairman of the United States-based global shipping and logistics conglomerate Safesea, highlighted a fundamental shift in how shippers will assess risk. The emergence of “asymmetric threats,” including the leverage of unmanned attack capabilities, has fundamentally altered the security landscape. The IMO has confirmed at least 18 attacks on vessels in the Gulf since the conflict began, including a March 11 incident where a Safesea oil tanker was rammed by two unmanned ships, resulting in one fatality.
This increased risk is already reflected in soaring insurance premiums. Marco Forgione, director general of the Chartered Institute of Export & International Trade, noted that hull and cargo insurance premiums have risen as much as 300 percent, a cost that shipping companies can only absorb for so long. Oscar Seikaly, CEO of NSI Insurance Group, stated that war risk coverage rates won’t return to normal unless a “resolution must be truly permanent and security guaranteed at 100 percent, not partial or 90 percent.”
The Cost of Transit and the Search for Alternatives
Recent reports indicate that Iran is already capitalizing on the situation. Lloyd’s List reported that one ship paid $2 million for the right to transit the Strait after obtaining authorization from Tehran. Iranian legislators recently approved legislation to impose transit fees on the waterway, according to Iran’s Fars News Agency. This move, while not unexpected, adds another layer of cost and uncertainty for shippers.
The disruption in the Strait of Hormuz is prompting companies to re-evaluate their trade routes, mirroring a trend seen during the COVID-19 pandemic when manufacturers diversified supply chains away from China. Nick Marro, lead analyst for global trade at the Economist Intelligence Unit, expects this shift to be more than temporary. “Given the geopolitical uncertainties that we’re currently seeing, this is likely going to be a permanent feature of risk management rather than just a temporary response to the Iran war,” he said. This long-term diversification could lead to a gradual decline in traffic through the Strait of Hormuz as exporting countries seek more stable and secure alternatives.
The situation also draws parallels to recent disruptions in the Red Sea, where attacks by Iranian-backed Houthis briefly suspended shipping operations in late 2023. While shipping has resumed, traffic remains below pre-2023 levels due to ongoing security concerns. This demonstrates the lasting impact of instability on global trade routes.
The immediate impact of the Strait of Hormuz closure has been a disruption of approximately 20 percent of the world’s crude oil and liquefied natural gas (LNG) supplies, contributing to rising energy prices globally. The blockade also impacts the export of petrochemicals, fertilizers, and raw materials used in plastic manufacturing, potentially affecting a wide range of industries.
Looking ahead, the focus will be on securing a lasting resolution to the conflict and establishing credible security assurances for shipping in the region. The next key development will be the outcome of ongoing diplomatic efforts to de-escalate tensions and facilitate the safe passage of vessels through the Strait of Hormuz.
What are your thoughts on the long-term implications of this disruption? Share your insights and perspectives in the comments below.
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