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Erin Hale, Correspondent
THE effective shutdown of the Strait of Hormuz has choked off a major artery of the global energy system, blocking the flow of a significant share of the oil and gas that power economies around the world.
However, shipping and trade experts caution that even if the strategic waterway were to reopen immediately, the shockwaves across global supply chains would linger long after vessels are once again allowed to transit freely.
“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,” said Nils Haupt, senior director for corporate communications at German shipping giant Hapag-Lloyd.
“We will see hundreds of ships who want to call in at the key ports in the Persian Gulf. Lots of containers are going into the region, and we will see disruption of supply chains going to and from the Persian Gulf,” Haupt said, using another name for the Gulf, which is also known as the Arabian Gulf.
At present, about 2 000 ships remain stranded in the region amid Iran’s partial blockade of the strait, according to the International Maritime Organisation (IMO), which says passage is currently being allowed only for a limited number of vessels from countries deemed friendly.
Of these, roughly 400 vessels are waiting in the nearby Gulf of Oman, indicating that many shipping firms are holding their positions in anticipation of a reopening, according to maritime intelligence company Windward.
Other vessels have been forced to divert through the Suez Canal or take the significantly longer and costlier route around the Cape of Good Hope in southern Africa to complete deliveries to Asia and Europe.
Oil exports from Saudi Arabia have also been rerouted through the Red Sea to avoid the strait altogether.
Svein Ringbakken, managing director of the Norwegian Shipowners’ Mutual War Risks Association, said that even if logistics hubs were operating at full capacity, clearing the accumulated backlog of oil, gas and other cargoes would take considerable time.
Ringbakken added that the situation has been compounded by repeated attacks that have damaged energy and transport infrastructure across the Middle East.
According to the International Energy Agency, more than 40 energy assets across the region have been “severely or very severely damaged”, with major oil and gas producers — including QatarEnergy, Kuwait Petroleum Company and Bahrain’s Bapco Energies — declaring force majeure amid production disruptions.
“The short answer is that it would take months to get shipping supply chains back to normal because of the backlog. Production lines have had to be stopped for many products because of a lack of storage capacity. Add to this the damage to both production facilities and port infrastructure. This all adds inefficiencies when the strait is opened,” Ringbakken said.
Iran’s effective closure of the Strait of Hormuz, launched in retaliation for US Israeli strikes that began on February 28, has disrupted roughly 20 percent of global crude oil and liquefied natural gas (LNG) supplies, fuelling sharp increases in energy prices worldwide.
The blockade has also halted the export of vast quantities of petrochemicals, fertilisers and raw materials used in plastic manufacturing.
Beyond the immediate disruption to trade flows, the shutdown has also triggered deeper concerns about the long term future of global shipping operations, particularly around risk assessment, according to SV Anchan, chairman of US based shipping and logistics conglomerate Safesea.
The IMO has confirmed at least 18 attacks on vessels across the Gulf since the conflict began, including the March 11 ramming of a Safesea oil tanker by two unmanned ships, which resulted in the death of one crew member.
“From an industry standpoint, the issue extends well beyond access. The emergence of asymmetric threats, including unmanned attack capabilities, has fundamentally altered the risk environment. Even in the event of a full reopening, a return to normal conditions will require a sustained period of stability. Shipowners, charterers and insurers will seek consistency, credible security assurances, and structured risk frameworks before committing operations at scale,” Anchan said.
Marco Forgione, director general of the Chartered Institute of Export and International Trade in the United Kingdom, said the crisis has delivered a lasting blow to confidence within the global shipping sector.
“Rebuilding the confidence of shippers in the safety of the strait will take considerable security reassurances, which could take years,” Forgione said, noting that Tehran has demonstrated an ability to disrupt shipping through threats alone.
He added that insurance had become a major pressure point, with hull and cargo premiums surging by as much as 300 percent.
“Shipping companies can only absorb these increases for so long,” he said.
Oscar Seikaly, chief executive officer of NSI Insurance Group, said war risk insurance premiums would not return to normal unless a resolution was permanent and security guarantees were absolute. “For war risk coverage to return to normal rates, a resolution must be truly permanent and security guaranteed at 100 percent, not partial or 90 percent,” he said.
Maritime data indicates that only a limited number of vessels have managed to transit the strait after securing authorisation from Tehran and routing through Iranian territorial waters, according to maritime intelligence outlet Lloyd’s List.
One ship reportedly paid US$2 million for passage rights, Lloyd’s List reported, while Iranian lawmakers this week approved legislation to impose formal transit fees on the strait, according to Iran’s Fars News Agency.
Shipping companies had previously suspended operations in the area in late 2023 following attacks on commercial vessels by Iranian backed Houthi forces.
Although shipping later resumed, traffic volumes remain below pre 2023 levels due to persistent security risks, Marro said.
“There is still a lot of trepidation around the durability of any potential ceasefire or de escalation from the conflict, and that’s something that we’ve learnt from the attacks by the Houthis in the Red Sea. It’s been a very stop start situation there,” he said.
Marro said the closure of the strait is likely to accelerate efforts by companies to diversify trade routes, mirroring the way the Covid 19 pandemic forced manufacturers to rethink supply chains heavily dependent on China.
“I think, 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.
Seikaly also predicted a long term shift away from reliance on the Strait of Hormuz.
“The ongoing volatility has caused exporting countries to realise the need for diversification, prompting countries and companies to explore alternative trade routes for strategic and political reasons,” he said.
“Over time, traffic through the Strait of Hormuz is likely to decline due to the risks associated with concentrating oil trade in such a volatile area.” – Al Jazeera.
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