Strait of Hormuz Conflict Disrupts Global Shipping, Costs Soar

The ongoing U.S.-Israel military actions in Iran have now stretched beyond two weeks, severely disrupting shipping through the Strait of Hormuz — one of the world's most critical maritime chokepoints. The interruption has triggered a sharp rise in global shipping costs and forced companies to reconsider supply chain layouts, raising concerns of the most destructive logistics disruption since the COVID-19 pandemic.

'Artery'Blockage Sends Shipping into Turmoil

The Strait of Hormuz serves as a vital artery for global oil and liquefied natural gas transport. According to the U.S. Energy Information Administration, around 20 million barrels of crude and petroleum products transit the strait daily, representing nearly $600 billion in annual energy trade. Since U.S.-Israeli military strikes against Iran, the strategic corridor's security has plunged to critical levels.

Physical bottlenecks caused by the conflict have sharply reduced traffic through the strait, leaving many commercial vessels idle or forced to reroute. Lloyd's List reported that only 77 ships passed through Hormuz between March 1-13, compared with 1,229 vessels in the same period in 2025.

Global shipping giants have taken emergency measures. Denmark's Maersk, Switzerland's Mediterranean Shipping Company, France's CMA CGM, and Germany's Hapag-Lloyd have all suspended or rerouted vessels away from the strait, directing ships to safe havens or around the Cape of Good Hope.

The previously busy Jebel Ali port in Dubai was temporarily shut after debris from intercepted missiles sparked fires. The Economist noted that such 'soft closures'can disrupt operations almost as severely as formal blockades, leaving many operators unable to maintain normal commercial navigation.

Multiple Premiums Drive Up Logistics Costs

The conflict is driving shipping costs higher through freight, insurance, and fuel prices. Rerouted voyages around the Cape of Good Hope add 3,500–4,000 nautical miles and 10–14 days of transit time. A 20-foot container now costs $200 more to lease, representing a 15–20% surge in freight rates. CMA CGM has introduced 'emergency conflict surcharges'of $2,000–$4,000 per container, while Hapag-Lloyd's 'war risk surcharge'reaches $1,500 per standard container.

Insurance markets are reacting sharply. As conflict escalates, war-risk premiums for tankers have surged. Analysts at Jefferies Group estimate that for vessels valued between $200–$300 million, a 3% new premium translates to around $7.5 million in war-risk coverage, compared with 0.25% before hostilities. Since March 5, many maritime insurers have suspended standard war-risk coverage in the Gulf, forcing shipowners to pay premiums of up to 10% of vessel value. A single ultra-large tanker worth $138 million could face $14 million in insurance costs per strait transit.

Fuel prices have also climbed, further raising operating costs. Rising crude prices are pushing ship fuel costs higher at major ports worldwide. Maersk CEO Vincent Clerc warned that 'these increases will ultimately be passed on to customers and consumers'.

Global Supply Chains Under Pressure

Shipping disruptions are causing cascading effects on supply chains. Key raw material routes are at risk. The Middle East is not only an energy hub but also a major source of industrial inputs like aluminum and fertilizers. About one-third of global urea and nearly half of the world's sulfur passes through Hormuz, with delays threatening agricultural and chemical sectors worldwide.

Precision manufacturing is also being hit. Analysts warn that extended transit times could disrupt automotive assembly in Germany, the U.S., and other regions within two to three weeks due to insufficient inventory buffers for Asian component delays.

High-value or time-sensitive cargo is increasingly shifting to air transport. Airfreight rates from South Asia to Europe have risen roughly 70%, further squeezing supply chain margins.

The United Nations Conference on Trade and Development (UNCTAD) recently cautioned that disruptions in the Strait of Hormuz underscore the vulnerability of maritime energy routes to geopolitical tensions, with far-reaching consequences for global supply chains and commodity markets.