The global shipping industry is once again facing a critical disruption risk — this time, from the escalating conflict between Israel and Iran.
Following Israel’s surprise attack on Iran’s military and nuclear infrastructure on Friday, and Iran’s retaliatory response, concerns have reignited over the security of the Strait of Hormuz. This narrow waterway links the Persian Gulf to the Arabian Sea and is widely recognized as one of the world’s most vital oil transit chokepoints.
According to the U.S. Energy Information Administration, oil flows through the strait averaged 20.9 million barrels per day in 2023, representing approximately 20% of the world’s petroleum liquids consumption. Any disruption, even temporary, could significantly drive up global energy prices, raise shipping costs, and trigger supply chain delays.
Not Just Oil: Container Trade Also at Risk
While the Strait of Hormuz is crucial for oil, it also plays a significant role in global container shipping. Ports such as Jebel Ali and Khor Fakkan in the UAE function as major transshipment hubs, serving as critical intermediaries for goods destined for Dubai, South Asia, and East Africa.
Analysts caution that even a partial obstruction of the strait could ripple across global trade routes. A disruption would likely cause freight rates to spike, complicate logistics, and increase transit times. Indeed, after the Israeli strikes, tanker freight rates from the Mideast Gulf to China jumped 24% to $1.67 per barrel on Friday, according to data from Kpler.
The impact is already being felt. Some shipping companies are choosing to avoid the strait altogether, according to BIMCO, the world’s largest shipping association. Jakob Larsen, BIMCO’s head of security, noted a “modest drop” in the number of vessels transiting the area due to mounting concerns among shipowners.
Security Fears, Detours, and Digital Interference
The conflict’s implications mirror the earlier Red Sea crisis, when Houthi rebel attacks forced vessels to detour thousands of kilometers around the Cape of Good Hope. A similar rerouting around Hormuz would not only be costly but could strain already tight shipping schedules and fuel markets further.
Although a full blockade of the Strait of Hormuz is still considered an unlikely “worst-case scenario” by many experts, the possibility of targeted vessel attacks by Iran or its proxies remains real, as reported by Lloyd’s List. The increasing presence of military and intelligence assets in the region only adds to the sense of volatility.
Compounding the risks, ships have reported growing electronic interference in the Gulf and near the Strait. These disruptions are affecting AIS (Automated Identification System) signals, which are crucial for safe navigation and traffic monitoring. In a recent advisory, the Combined Maritime Forces’ JMIC warned that the interferences are having a “significant impact” on vessels’ ability to transmit accurate location data.
As tensions rise and geopolitical uncertainty looms, shipping companies, energy traders, and global markets are watching the Strait of Hormuz with mounting unease. What happens next could reshape trade routes and impact economies far beyond the Middle East.
