The United States and Israel carried out strikes on Iran on Saturday (February 28), prompting an immediate reassessment of risk across shipping routes and raising the possibility that traffic through the Strait of Hormuz could be cut off.
Ship operators, traders and insurers reacted quickly to the heightened tensions. Several energy shippers suspended movements and official warnings led to an effective stoppage of traffic through the strait on Saturday. Analysts say the effect of ships avoiding the area is similar to a physical blockade: whether vessels are turned back by force or by risk management, volumes flowing through the waterway are sharply reduced.
Why the strait matters
The Strait of Hormuz, between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. At its narrowest point the passage is about 33 kilometres wide, with two single‑lane shipping channels only roughly 2 miles across in each direction. Those constraints make transits congested and vulnerable to disruption.
Around a fifth of global oil consumption passes through the strait. Energy consultants estimate roughly 20 million barrels of crude, condensate and fuels move daily through the waterway. Qatar also uses the route to export substantial volumes of liquefied natural gas. Any sustained blockage or prolonged disruption would be expected to send crude prices significantly higher and strain importing economies, especially in Asia.
Market reaction and potential economic impact
Oil markets have already reacted to the prospect of military action. Prices rose to multi‑month highs in February amid concern over strikes on Iran. A full, sustained closure of the strait would create acute supply pressure and could push prices much higher, with negative knock‑on effects for the global economy and energy‑dependent industries.
Who would be most affected
US Energy Information Administration data show the vast majority of fuels transiting the strait are destined for Asian markets. An estimated 82% of crude and other fuels passing through the waterway head to Asia, with China, India, Japan and South Korea together accounting for nearly 70% of crude and condensate flows. These countries would be particularly exposed to any prolonged supply disruption.
Past incidents and shipping precautions
The strait was a focal point during last year’s Israel‑Iran confrontation. While commercial vessels avoided major attacks then, shipowners increased security measures and some altered or canceled transits. There were also reports of electronic interference affecting navigation systems in and near the Gulf, underscoring non‑kinetic risks to shipping.
How a closure would affect Iran and Gulf states
A prolonged closure would be self‑defeating for Tehran as well as damaging to regional partners. Iran depends on the route to export oil to buyers including China, and sustained interruption would strain recent improvements in relations with Gulf Arab states such as Saudi Arabia and the UAE.
Alternative routes and capacity
Gulf producers have developed pipelines and terminals to reduce reliance on the strait. Saudi Arabia’s East‑West Crude Oil Pipeline can move up to 5 million barrels per day from the Gulf to the Red Sea, and the UAE has a pipeline from onshore fields to the Fujairah terminal on the Gulf of Oman. The EIA estimates roughly 2.6 million barrels per day could be rerouted to bypass Hormuz if necessary, but that falls well short of the total flows that normally transit the waterway.
Edited by: Uwe Hessler
Editor’s note: This article was first published on June 18, 2025, and updated on March 1, 2026, to reflect US strikes on Iran and the effective halt of traffic through the strait.