Iran-Israel War: Uncertainty over the Strait of Hormuz causes shipping costs to soar
The threat of a blockage of the Strait of Hormuz between Iran and the United Arab Emirates is receding, but it remains very much in people's minds: a blockage of the Strait of Hormuz between Iran and the United Arab Emirates is causing shipping costs to soar.
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Blocking the Strait of Hormuz remains one of Tehran's main threats since the start of the war between Israel and Iran. This short passage between the Gulf of Oman and the Persian Gulf provides access to the Indian Ocean. It ensures the transit of 20% of the world's oil consumption in a 55-kilometer-wide corridor. It's not just oil; liquefied natural gas (LNG) from the region also transits, as does cargo traffic, including essential goods consumed by Kuwait and Iraq, in particular. These tensions are causing the so-called "spot rate" on large oil tankers to soar: the price of the commodity set for immediate delivery.
For oil tankers connecting the Middle East to China, these purchase rates have skyrocketed by more than 150% in one week. The increase in the bill is less severe but remains very steep for LNG, with prices up 30%, also in one week.
Insurance is also soaring: premiums paid by major shipping companies are up 60%. Despite Iran's recent threats, it's hard to see how Tehran could completely block the Strait of Hormuz, which would shoot itself in the foot, as the country itself would feel the effects on its trade.
The same problem as at the beginning of 2025 is being faced with attacks by the Houthis (Yemeni rebels) in the Red Sea and the blockage of the Suez Canal, forcing merchant ships to divert their routes through southern Africa. This has caused freight and insurance prices to skyrocket.
The impact of recent events on maritime traffic in the Persian Gulf is significant. The number of oil tankers in the region loading crude oil has dropped significantly during the 12-day war between Israel and Iran. At least twenty fewer ships. This isn't a huge number, but it demonstrates the nervousness of the world's major shipping operators.
Francetvinfo
