Key Takeaways:
The Strait of Hormuz is effectively closed to commercial shipping, with tanker traffic collapsing 97% from pre-war levels and war-risk insurance costs surging after a fresh wave of Iranian attacks on vessels this week.
The US Navy-led Joint Maritime Information Center raised its advisory level for transiting the strait from "substantial" to "severe" on Wednesday, the highest category, citing a likelihood of "deliberate hostile action." It is the first time since mid-June that the waterway has been classified at that level. Open data showed only two tankers passed through in the early hours of Thursday — a sanctions-hit crude carrier that loaded at Iran's Kharg Island and the Marshall Islands-flagged chemical tanker Well Sail — compared with a pre-conflict average of 125 to 140 daily sailings.
"Risk will remain high for all ships transiting the Strait of Hormuz for the foreseeable future and as long as there is no bilateral agreement between the US and Iran to formally agree on the status of maritime shipping through the strait," Sherwan Hindreen Ali, Middle East Research Manager at conflict-monitoring group ACLED, said. "No authority has been able to militarily neutralize the Iranian security threat to shipping so far."
War-risk insurers and regulators are responding in parallel. Rates for ships operating inside the Gulf have moved toward roughly 3 percent of vessel value, up from around 2 percent late last week, industry sources told Reuters. For owners already facing elevated premiums since the war began on Feb. 28, that jump makes transiting the region significantly more expensive. The UN's International Maritime Organization has warned that sailing through Hormuz should be avoided "as long as the safety and security of crews cannot be assured," Secretary-General Arsenio Dominguez said. Brent crude traded above $76 a barrel this week, driven by concerns over Iranian supply and the broader security of Gulf shipments.
The renewed disruption threatens to undo the fragile reopening that followed last month's US-Iran memorandum of understanding. After the initial ceasefire, daily traffic had recovered to an average of 40 ships over the past two weeks — still 70 percent below pre-war levels but a meaningful improvement from the near-total halt during the war's opening weeks. That progress was shattered Tuesday when Iranian forces fired on three commercial vessels in Oman's territorial waters near Hormuz, including a Qatari gas carrier and a Saudi oil tanker, in the first such attacks since the MoU was signed. Washington responded by striking more than 160 Iranian targets and revoking Iran's temporary authorization to sell oil under a limited sanctions waiver.
Iran's four-point strategy
Tehran's leaders have concluded that their most potent weapon is not military power but geography, according to a doctrine published by the Revolutionary Guard-affiliated Fars news agency. The plan calls for halting all crude oil exports through Hormuz by attacking tankers and laying sea mines, opening a second front at the Bab el-Mandeb strait off Yemen through allied Houthi forces, raising the human and financial cost to US forces through asymmetric strikes, and maximizing "strategic ambiguity" to force Washington to reconsider Iran's deterrent boundaries.
Iran's Revolutionary Guard Navy said Thursday that transit capacity under its supervision had recovered to about 50 percent of pre-war levels over the past two weeks, and accused the US of disrupting the waterway's gradual reopening. Parliament speaker Mohammad Bagher Ghalibaf warned on X: "If you strike, you will be struck" — explicitly linking US military actions to Iran's willingness to target shipping.
The impact is already cascading through global shipping networks. Twenty-two Japan-linked vessels, including six large crude oil tankers, transited the strait to exit between July 7 and 9, leaving only four vessels in the Gulf, Japanese Transport Minister Yasushi Kaneko said Friday. Some LNG tankers — including QatarEnergy-linked carriers Al Samriya, Al Dafna, Al Gattara and Al Rayyan — have entered the strait in ballast in recent days, though shipping sources said vessels were increasingly switching off their public AIS tracking transponders, making it hard to assess true traffic levels.
Analysts say a diplomatic resolution remains unlikely unless it is folded into a broader agreement to end the war and provide sanctions relief for Iran. "A diplomatic arrangement that convinces Tehran to cease attacks is more plausible than trying to secure the route by force alone," ACLED's Ali said. "But such a deal is unlikely unless it is part of a comprehensive settlement."
This article is for informational purposes only and does not constitute investment advice.
