The global energy supply chain is facing an unprecedented disruption as transits through the Strait of Hormuz have plummeted by 95% compared to pre-conflict levels. According to the latest data from Clarksons Research, the waterway—which typically sees around 125 transits daily—is now witnessing a mere five transits per day. This dramatic reduction has effectively severed one of the world's most critical maritime corridors, leaving approximately 1,100 vessels, including oil tankers, bulkers, and containerships, currently stranded inside the Gulf.
Financial consequences are rippling through the market. Charter rates for tankers and gas carriers remain significantly elevated, with VLCC earnings hovering at $185,000 per day—five times the long-term average. The cost of moving a single barrel of crude oil from the US Gulf to Asia has doubled to $10 per barrel since the start of the year. As the conflict intensifies, alternative logistics routes, such as traffic to Yanbu on the Red Sea, have seen a sixfold increase in activity, signaling a major shift in global trade patterns.
Insurance remains a central point of contention. While Lloyd’s of London maintains that hull and cargo coverage is still available, the risk profile has been radically adjusted. Broker Marsh reports that war risk premiums have surged to between 1% and 1.5% of the insured value, up from 0.25% pre-conflict. This has rendered the economics of many voyages untenable, leading to mass policy cancellations and subsequent reinstatements at exorbitant rates.
Geopolitical tension has escalated further as President Donald Trump has called upon a coalition of allies—including China, France, Japan, South Korea, and the UK—to provide naval escorts for commercial vessels. However, the international response remains tepid, with nations citing legal limitations and diplomatic caution. Iran has countered these moves by warning that any foreign intervention will lead to further escalation, maintaining its blockade over the waterway.
Amidst the uncertainty, a $20 billion reinsurance facility announced by the United States has been met with skepticism by industry analysts regarding its efficacy. As the standoff continues, the marine insurance market is being forced to negotiate daily with underwriters and brokers, creating an environment of extreme volatility.
The long-term impact on global energy markets is significant, with energy prices already surging 40% since the initial threats against shipping. With no clear resolution in sight and only 66 vessels having successfully passed the Strait since the onset of hostilities, the maritime industry is bracing for a protracted period of logistical isolation in the Gulf.