Strait of Hormuz Ship Traffic Slows Dramatically After Middle East Conflict

Ship traffic in the Strait of Hormuz has slowed to a crawl, with major companies like Maersk rerouting vessels. This is a significant change from normal operations.
By Newsroom | Trade, Geopolitics |

The Strait of Hormuz, a crucial artery for global trade, has seen ship traffic dramatically slow to a crawl, with major shipping lines suspending operations and rerouting vessels. This disruption stems from escalating conflict in the Middle East, following US and Israel strikes on Iran over the weekend. Roughly one-fifth of the world's oil moves through this vital passageway, and its closure signals significant volatility for global markets and the cost of living.

It’s dire in the Strait of Hormuz, so budgets need skill, ambition and care - 1

SHIPPING GIANTS REROUTE, TRADE FLOWS SUFFER

Maersk, a prominent Danish shipping company, has declared a suspension of all vessel crossings in the Strait of Hormuz "until further notice." Services that call on ports in the Persian Gulf are now bracing for delays. The company is rerouting its Middle East-India to Mediterranean and Middle East-India to U.S. East Coast services around the Cape of Good Hope. This move highlights the palpable fear of prolonged disruption to key maritime corridors, including the adjacent Bab el-Mandeb Strait. The broader impact extends to global container trade, not just oil.

Read More: Canada and US Resume Trade Talks in Washington on Friday for USMCA Review

It’s dire in the Strait of Hormuz, so budgets need skill, ambition and care - 2

OIL PRICES SPIKE, COST OF LIVING PRESSURES MOUNT

The immediate aftermath of the strikes saw oil prices jump approximately six percent. Experts like Johnathan McMenamin, head of economic forecasts at Barrenjoey, point to rising oil prices as having the most direct impact on real economic activity. For many Asian nations, which import more oil than they export, increased oil prices coupled with weaker local currencies present a challenging scenario. Richard Yetsenga, ANZ’s chief economist, noted that governments are already taking steps to cushion the blow to households. Thailand, for instance, has banned all petroleum exports and is tapping a national fuel fund to protect motorists.

It’s dire in the Strait of Hormuz, so budgets need skill, ambition and care - 3

Reports indicate that President Trump has stated the U.S. Navy would escort tankers through the Strait of Hormuz if necessary. However, there are significant doubts regarding the U.S. Navy's capacity to provide such escorts, given that 60 or more tankers typically traverse the strait daily. Companies like Flexport, a global shipping logistics firm, expressed concerns not only for the safety of their physical cargo ships but also for the crew's safety. Currently, the Gulf is described as being "packed with tankers and other ships unable to get out."

Read More: West Asia Airspace Closure Strands 140 Indians, Including 60 Telugu Speakers, in Bahrain

It’s dire in the Strait of Hormuz, so budgets need skill, ambition and care - 4

MARITIME CHOKEPOINTS AS WEAPONS

The weaponization of trade routes, akin to Vladimir Putin's energy war impacting Europe's gas supplies, is now evident. Closing the Strait of Hormuz is poised to dramatically increase the cost of petrol and other consumer goods. Iran's elite Revolutionary Guard has claimed "complete control" over the strait, vowing to "set on fire" any vessels that attempt to cross. This demonstrates how efficiency-driven global supply chains leave little room for error when disruptions strike, as maritime chokepoints not only shape trade routes but also redistribute economic costs.

Read More: US Customs Cannot Refund $166 Billion in Tariffs Quickly Due to System Limits

BACKGROUND

The Strait of Hormuz is a bending waterway, approximately 33 kilometers wide at its narrowest point. While Iran and Oman share territorial waters within the strait, it is broadly recognized as an international waterway open to all ships. The escalating tensions and potential closure directly threaten the flow of a significant portion of the world's energy and trade.

"The failure to immediately signal to global markets that additional supplies would be released had real consequences for how oil markets responded." - Atlantic Council

"Maritime chokepoints therefore do not just shape trade routes, but redistribute costs across economies, exposing how efficiency-driven global supply chains leave little slack when disruption strikes." - RTE

Frequently Asked Questions

Q: Why has ship traffic slowed in the Strait of Hormuz since the weekend?
Ship traffic in the Strait of Hormuz has slowed because of rising conflict in the Middle East. Major shipping companies like Maersk have stopped or rerouted their ships to avoid the area.
Q: How does the Strait of Hormuz slowdown affect global trade and oil prices?
About one-fifth of the world's oil passes through the Strait of Hormuz. When traffic slows, oil prices can jump, as they did by 6% recently. This makes living costs higher, especially for countries that import a lot of oil.
Q: Which shipping companies are rerouting ships away from the Strait of Hormuz?
Maersk, a major Danish shipping company, has stopped all vessel crossings in the Strait of Hormuz for now. They are sending their ships around the Cape of Good Hope instead, which will cause delays.
Q: What is being done to help ships get through the Strait of Hormuz safely?
The US President has said the US Navy might escort tankers through the strait. However, there are questions about whether the Navy has enough ships to protect the many tankers that use the strait every day.
Q: What is the impact of closing trade routes like the Strait of Hormuz?
Closing important trade routes like the Strait of Hormuz can make goods more expensive, like petrol and other items. It shows how global supply chains are easily broken when disruptions happen.