What happened
Tensions between the United States and Iran escalated sharply in early July 2026. On 7 July, Iranian forces attacked commercial vessels near the Strait of Hormuz using missiles and drones. The US responded by reinstating a naval blockade of Iranian ports on 14 July and conducting airstrikes against Iranian military and maritime assets. The Iranian Revolutionary Guard Corps has since boarded merchant ships, deployed sea mines, and fired warning shots to force vessels into Iranian-controlled waters.
The result is a near-total stoppage of commercial shipping through the Strait. The IMO has reported that very few ships, if any, are safely navigating the waterway. Daily transits have fallen by roughly 90% compared to pre-conflict levels. An estimated 6,000 seafarers remain stranded on hundreds of ships moored in the Persian Gulf, unable to exit.
Two chokepoints down at once
The Hormuz crisis compounds the Red Sea disruption that has been running since late 2023. With Houthi forces declaring a blockade against Saudi-linked shipping in the Bab el-Mandeb Strait, and the Strait of Hormuz now effectively closed, two of the world's most critical maritime chokepoints are simultaneously disrupted. Carriers that rerouted from the Red Sea around the Cape of Good Hope are now facing additional pressure from the Hormuz shutdown. The overlap is unprecedented in modern shipping.
How it affects oil and fuel costs
The Strait of Hormuz has historically carried around 20 to 25% of the world's seaborne oil. Its effective closure pushed Brent crude above $100 per barrel in mid-July 2026, with peaks reported near $120 before diplomatic signals brought some relief. Oil prices remain volatile and highly sensitive to news from the region.
For shippers, the oil price matters in two ways. First, it drives the Bunker Adjustment Factor, the fuel surcharge that carriers apply on every shipment. The July 2026 BAF reset already reflected rising fuel costs, and if oil stays above $100, the next quarterly reset will push BAF higher still. Second, oil prices feed into the broader cost of goods for any supply chain that relies on petrochemical inputs, plastics, or energy-intensive manufacturing.
The insurance crisis
War risk insurance premiums for vessels transiting the Persian Gulf and Strait of Hormuz have surged by up to 1,000% at the peak of tensions in mid-July. In practical terms, the premiums are so high that they price most voyages out of the market. Marine insurers have the right to cancel coverage for high-risk zones, and many have exercised it. For shipowners, sending a vessel through without adequate insurance is not commercially viable and may breach charter party terms.
This insurance surge acts as a de facto physical blockade. Even if the waterway were technically navigable, the cost of insuring a transit makes it uneconomic for all but the most essential or government-backed cargoes. The situation is being described by underwriters as a multi-line insurance event affecting marine, energy, and political risk lines simultaneously.
Impact on container shipping
The Strait of Hormuz is primarily an energy chokepoint, but container shipping services that call at ports in the Persian Gulf, including Dubai (Jebel Ali), Abu Dhabi, Bahrain, Kuwait, and Qatar, are directly affected. Several carriers have suspended or reduced services to Gulf ports, rerouting container ships to avoid the Strait entirely. Cargo destined for Gulf ports is being transhipped through alternative hubs such as Salalah in Oman, Colombo, or ports on the Indian west coast.
- Transit times to Gulf ports have increased by 5 to 15 days depending on the alternative routing and the transhipment hub used.
- War Risk Surcharges have been applied or increased on Gulf-bound services by most major carriers.
- Equipment availability in the Gulf region is tightening as fewer vessels call and empty containers are not being repositioned in.
- Booking reliability has dropped as carriers adjust schedules with short notice, cancel port calls, or divert vessels mid-voyage.
The knock-on effects beyond the Gulf
Even if your cargo does not touch the Persian Gulf, the Hormuz disruption can reach your supply chain through several channels:
- Fuel costs. Higher oil prices push BAF up on every trade lane, not just Gulf routes.
- Vessel redeployment. Carriers pulling ships from Gulf services or rerouting around the crisis zone reduces available capacity on other trades, tightening space and supporting rate increases elsewhere.
- Insurance market contagion. The strain on the war risk insurance market can tighten underwriting across other high-risk zones, affecting premiums more broadly.
- Cascading delays. Ships delayed or rerouted in one region disrupt rotations on connecting services, causing schedule slippage that shows up as missed connections and rollovers far from the original crisis zone.
Diplomacy is active but fragile
As of late July 2026, the US has reportedly paused airstrikes to facilitate diplomatic talks. Oman is mediating between Tehran and international actors on a potential reopening. Oil prices have shown sensitivity to these signals, pulling back from the $120 peak. But the situation is volatile, and shipping decisions should not assume a quick resolution. Plan for the disruption to continue, and treat any reopening as upside.
What shippers should do now
- Check your routing. If any of your shipments transit the Strait of Hormuz or call at Persian Gulf ports, confirm with your carrier or forwarder whether the service is still running and what the alternative routing is.
- Ask about surcharges. War Risk Surcharges and Emergency Bunker Surcharges may have been added or increased on your affected lanes. Request updated all-in quotes.
- Review your insurance. If you carry cargo insurance, confirm with your insurer whether your coverage extends to the current conflict zone and whether any exclusions have been triggered.
- Plan for longer transit times. If your cargo is being transhipped through an alternative hub, add the extra days to your planning horizon and adjust downstream commitments.
- Monitor your shipments actively. In a fast-moving crisis, carrier schedules change with little notice. Track your containers in real time so you know immediately if a vessel is diverted or a port call is skipped.
- Watch the fuel surcharge. If oil stays above $100, the next BAF reset will be significant. Build the higher fuel cost into your logistics budget now rather than being surprised by the invoice.
- Diversify sourcing where possible. For goods sourced from or through the Gulf, consider whether alternative suppliers outside the affected zone can reduce your exposure to this specific chokepoint risk.
The bottom line
The Strait of Hormuz crisis is the second major maritime chokepoint disruption of the past three years, and it is happening while the Red Sea disruption is still active. Commercial traffic through the Strait has dropped by roughly 90%, insurance premiums have spiked to levels that act as a financial blockade, and oil prices have breached $100 per barrel. Container services to the Gulf are being rerouted or suspended, adding days and cost to every affected shipment. Diplomatic talks are underway but the outcome is uncertain. The practical response for shippers is the same as with any live disruption: confirm your routing, understand your surcharges, extend your planning horizon, and track your cargo closely. The crisis may resolve in weeks or it may settle into a prolonged standoff, but either way, the costs and delays are here now and need to be managed now.