Just south of the Strait of Hormuz, marine maps show what looks like a traffic jam, dozens of ships clustered near each other. Beyond the strait, in the Persian Gulf, there’s another snarl of maritime traffic. That’s because the Strait of Hormuz—which 20 percent of the world’s oil and natural gas traverses—is now more dangerous than it’s been for decades. That’s already affecting oil prices and global shipping. Even if the conflict ends tomorrow, the knock-on effects will last for years.
For global shipping, the Strait of Hormuz, the only route out of the Persian Gulf, is as important as the Suez Canal—and the canal’s recent problems offer a taste of what’s to come. In November 2023, Houthi rebels attacked the Galaxy Leader, a ship traversing the Red Sea, which began a series of attacks. By February 2024, container traffic in the Suez Canal had plunged by 82 percent. Suez had recently begun to recover, only to be hit by turbulence from the war in Iran. And now a similar fate has struck the Strait of Hormuz, right on Iran’s doorstep.
Just south of the Strait of Hormuz, marine maps show what looks like a traffic jam, dozens of ships clustered near each other. Beyond the strait, in the Persian Gulf, there’s another snarl of maritime traffic. That’s because the Strait of Hormuz—which 20 percent of the world’s oil and natural gas traverses—is now more dangerous than it’s been for decades. That’s already affecting oil prices and global shipping. Even if the conflict ends tomorrow, the knock-on effects will last for years.
For global shipping, the Strait of Hormuz, the only route out of the Persian Gulf, is as important as the Suez Canal—and the canal’s recent problems offer a taste of what’s to come. In November 2023, Houthi rebels attacked the Galaxy Leader, a ship traversing the Red Sea, which began a series of attacks. By February 2024, container traffic in the Suez Canal had plunged by 82 percent. Suez had recently begun to recover, only to be hit by turbulence from the war in Iran. And now a similar fate has struck the Strait of Hormuz, right on Iran’s doorstep.
Every time tensions flare up in the Middle East, fears flare up that Iran—which is located on one side of the strait, with Oman on the other—will effectively close it. It almost never tries to, because its own oil trade also depends on ships being able to pass. But hours after the United States and Israel attacked on Feb. 28, Tehran warned vessels not to travel through the strait (its side of it, to be precise), and has now said it will attack ships that try to do so. Now traffic has ground to a virtual standstill there. At least three vessels have also been struck by missiles.
But in reality, no action from Tehran was needed for traffic to stall in the strait, because the insurance industry has spoken. Ships need special permission from their underwriters to enter particularly dangerous waters. Whenever armed conflict erupts or looks likely to, insurers—even seasoned war-risk insurers—impose special conditions that make it more expensive and more difficult to enter the perilous waters.
That’s exactly what has happened on both sides of the Strait of Hormuz. In the late morning of March 2, Danish maritime expert Lars Jensen posted on LinkedIn that “there are presently 17 container vessels with a size larger than 4000 TEU trapped inside the Persian Gulf with a combined capacity of 156.000 TEU. In addition there are roughly 50 container vessels with a size smaller than 4000 TEU. All in all this means approximately 200.000 TEU of container vessel capacity is trapped inside the Gulf.” The ships trapped in the Gulf, Jensen added, amount to “the world’s 13th largest carrier, and it equals some 0.6% of the global container capacity being unavailable.” (TEU is a measurement that corresponds to one regular-size container.)
On the other side of the strait, a similar accumulation of tankers has been awaiting insurers’ permission to enter—or orders to continue to wait, or orders to sail elsewhere. But waiting is not a good option, either. “War-risk insurance for ships, even when high, is usually a tiny part of the cost of a ship’s transit,” said Cormac Mc Garry. “The far bigger impact is when ships simply do not sail. Many, if not most, ships are effectively pausing to see what happens in the next few days.”
The ships trapped in the Gulf are, of course, likely to be trapped for far longer than a few days—possibly until the conflict ends, which U.S. President Donald Trump has said may be in “four to five weeks” and Secretary of Defense Pete Hegseth suggested on March 2 may be two, four, or six weeks. That’s two weeks, four weeks, five weeks, six weeks, possibly more, that seafarers will sit idle in the Gulf (one can only hope they have food), and many days, perhaps more, that many other ships sit idle on the other side of the Strait of Hormuz.
While ships can reroute from the Red Sea and the Suez Canal, they can’t reroute from the Strait of Hormuz: The Persian Gulf, where all that oil and gas is collected, has no other exit. Saudi Arabia and the United Arab Emirates own one land pipeline each, as does Iran, but the land route can only transport part of what the strait can, and shifting from sea to land transport involves complex logistics. It’s unsurprising that oil and gas prices have already risen significantly. (More than 7 billion barrels of crude oil are stored onshore and on floating vessels but are inaccessible to most countries and companies.)
While those ships are sitting there, they can’t finish the trips they were on—or pick up subsequent voyages. The strain on the system accumulates over time, especially as other delays stack up. Oil will be worst hit, but the trapped ships are critical to global cargo more broadly.
For the Gulf states, the near-halt also means that necessities won’t be arriving. “If the strait is near-shut for weeks, food will become scarce at some point, as will all those other things that don’t get to desert countries by trains and planes, which is basically everything,” Mc Garry noted. Goods can be flown in, for sure, but only in small quantities, and flying is currently also decidedly unsafe in the region. That is a frightening proposition for the wealthy Gulf states, which boast exceptionally high standards of living but depend on imports for nearly every walk of life.
If living standards plummet in the Gulf, an aggrieved public is likely to make its views known, and the rulers in turn will make the point to Washington. But it’s not easy to put the demons of war back in the box, especially after you’ve killed most of a country’s leadership. The stability of the Strait of Hormuz ultimately depends on some kind of stability in Iran—and that looks a long, long way away.
This post is part of FP’s ongoing coverage. Read more here.
