Hormuz disruption accelerates rerouting and reinforces structural tightness across shipping markets

The outbreak of conflict converts theoretical Hormuz risk into operational reality
US and Israeli military operations against Iran since late February, and subsequent Iranian military action throughout the Persian Gulf, have triggered the most significant disruption to global oil and gas markets in history. Starting in early March, Iranian forces declared the Strait closed and carried out attacks on vessels attempting to transit. The Strait is a key waterway for roughly 20% of the world’s maritime trade in crude oil and petroleum products, and its closure has sent shockwaves through global energy markets. The waterway typically handles around 20 mb/d of oil flows, but current estimates suggest only limited volumes, primarily Iranian exports, continue to transit. Even accounting for alternative routing via Yanbu, Fujairah, and Ceyhan, export capacity remains constrained, implying a supply shortfall of roughly 9–10 mb/d, according to Clarksons, and forcing upstream shut-ins across the region. A selective access regime emerged as the month progressed, with Iran permitting transit for certain Chinese, Indian, Turkish, and Pakistani-linked vessels while maintaining the blockade against Western-flag shipping.

Oil price surge, insurance withdrawal, and vessel attacks add layers of disruption
Brent crude surpassed $100 per barrel this month for the first time in four years, rising more than 40% above pre-war levels according to the Financial Times. Although the primary impact has been the physical dislocation of oil, rather than price alone. War-risk insurance was effectively withdrawn or repriced to prohibitive levels across the Persian Gulf and surrounding conflict zones almost simultaneously, as ships cannot legally or safely operate in high-risk zones without cover. At least 16 vessels were struck in Gulf waters during the month, with attacks described as deliberately unpredictable rather than targeted, aimed at maximising uncertainty. The US stepped up military efforts to clear the Strait, deploying specialised aircraft and additional marines to the region, though officials acknowledged reopening the 100-mile-long waterway presents a challenge without a clear or immediate solution.

Diplomatic signals are encouraging, but trade route shifts will outlast the conflict
Conditions remained fluid into month-end, with Trump announcing that the US and Iran had held productive talks toward a possible full resolution of hostilities, with airstrikes on Iranian energy infrastructure temporarily paused. A ceasefire would bring a sharp normalisation of MEG freight indexes alongside a surge in cargo clearance activity across tanker and gas carrier segments. The deeper trade consequences, however, are likely to persist regardless of timing. The disruption has prompted oil-importing nations to accelerate diversification away from Persian Gulf supply toward Atlantic Basin and West African sources, a structural shift in tonne-mile demand patterns that benefits long-haul crude and LPG carriers with Atlantic Basin positioning for years to come.