Iran has effectively blocked the Strait of Hormuz since the war began, leading traffic through the strait to largely stop completely due to the conflict in the Middle East. This vital waterway normally carries about one-fifth of the world's oil and gas supply, and its closure has caused oil prices to surge significantly, reaching over $100 per barrel.
In response, Donald Trump announced that the US Navy will block all ships trying to enter or exit the Strait of Hormuz, escalating tensions. The US will block all ship traffic to and from Iranian ports starting Monday at 16:00 Norwegian time. Trump also stated that the US attacked Iran's Kharg Island oil terminal, destroying military targets but sparing oil infrastructure, and threatened to reconsider if Iran disrupts Strait passage. The Trump administration is considering occupying or blockading Kharg Island to pressure Iran into opening the Strait.
Maritime traffic has suffered a severe decline, with Iran's Islamic Revolutionary Guards Corps (IRGC) imposing a de facto 'toll booth' system in the Strait, charging vessels for transit. Traffic through the Strait has plummeted by 90% since the conflict began, and only around 150 vessels have transited the Strait since March 1, compared to about 140 per day pre-war. Iran-connected vessels account for a significant portion of recent transits, up to 90% in recent days.
Attacks on ships have resulted in casualties, with at least 18 ships hit and at least 7 crew members killed in the Strait since the conflict began. The U.K. Maritime Trade Operations Center reported attacks on several vessels near the Strait of Hormuz and warned of elevated electronic interference. Oman stated that a bomb-carrying drone boat struck a Marshall Islands-flagged oil tanker in the Gulf of Oman, killing one mariner, while Iran has been threatening vessels approaching the Strait of Hormuz and is believed to have launched multiple attacks. An attack on two oil tankers off Iraq killed at least one crew member, while a cargo ship caught fire after being hit by shrapnel.
Broader regional attacks have caused disruptions beyond the Strait, with Saudi Arabia intercepting Iranian drones that attacked the Ras Tanura oil refinery near Dammam, and the refinery was shut down as a precaution. The United States Central Command said it had attacked 16 Iranian mine-laying vessels near the Strait of Hormuz on March 11.
Conflicting reports exist on the Strait's status and ceasefire compliance, with a two-week ceasefire agreement including Iran reopening the Strait, but reports suggest Iran is still charging fees or restricting passage. There are conflicting reports about whether the Strait of Hormuz, where a large portion of the world's oil transports are currently stuck, is open or closed. There are doubts about whether the strait opened at all.
The economic fallout includes surging energy prices and market turmoil, with energy prices rising sharply on Monday due to disruptions to tanker traffic through the Strait of Hormuz and damage to production facilities from U.S. and Israeli attacks on Iran. Natural gas prices rose more than 40% in Europe after QatarEnergy halted production of liquefied natural gas due to attacks on its facilities. U.S. gas prices were already rising ahead of the summer driving season, with the national average up by 6 cents per gallon, while global markets have been roiled since the United States and Israel launched attacks on Iran, with Tehran's retaliatory strikes nearly cutting off maritime traffic through the Strait of Hormuz. Wall Street's main stock indices were down more than one percent in early afternoon trading, and Europe's and most Asian markets closed lower, and Iran intends to continue blocking the Strait of Hormuz, which could push global oil prices higher if the standoff drags on.
Global efforts to stabilize oil markets include the release of strategic reserves, with IEA member countries agreeing to unlock 400 million barrels of oil from their reserves, their largest release ever. The U.S. vowed to contribute 172 million barrels from its Strategic Petroleum Reserve. Crude oil prices briefly dipped after the IEA reserve release news but rose back over $90 per barrel later that same day, settling around $100 by early March 12.
Logistical chaos has left ships stranded and supply chains disrupted, with around 670 cargo ships waiting on the western side of the Strait, with UAE, Greek, and Chinese companies among the most affected. Tanker traffic dropped sharply in the Strait of Hormuz due to disrupted satellite navigation systems, according to Kpler.
International reactions include assistance efforts, with the UK offering newly developed seaborne drones for mine-clearing in the region, as no British mine-clearing ship is currently there. Germany's government and defense minister have stated that the war with Iran has nothing to do with NATO and criticized Trump's expectations of European navies.
Specific industry impacts are severe, with Qatar halting helium production due to the war, impacting global supply for semiconductors, medical imaging, and space technology. Airlines face potential disruption to long-haul Easter flights due to threatened jet fuel supplies from the Strait closure.
The Strait of Hormuz normally carries about one-fifth of the world's oil and gas supply, making its blockage a critical threat to global energy security.
The implications of this crisis include potential long-term economic and geopolitical consequences if the blockade persists, such as sustained high energy prices, supply chain breakdowns, and increased military tensions in the region.
Key uncertainties remain, including whether the Strait of Hormuz is currently open or closed to international shipping and the exact number of vessels that have transited the Strait since the conflict began. The specific terms and compliance status of the two-week ceasefire agreement regarding the Strait are also unclear, along with the full extent of casualties and damage to ships in the Strait region. The long-term economic impact on global supply chains and oil prices if the blockade continues is another major unknown.