The Strait of Hormuz Crisis: Shipping Confronts Its Worst Nightmare

5 April 2026

The shipping industry has long identified the closure of the Strait of Hormuz as its most catastrophic risk scenario. That scenario is no longer hypothetical. Following the commencement of joint US-Israeli military operations against Iran on 28 February 2026, and Iran’s retaliatory attacks on commercial shipping in the Strait, the world’s most important maritime energy chokepoint has been effectively shut to normal traffic. The consequences for global trade, energy markets, and the shipping industry are severe and far-reaching.

The Conflict and Its Maritime Dimensions

The military strikes against Iran, which included the killing of Iran’s Supreme Leader, have provoked a fierce response. Iran has launched retaliatory missile and drone attacks against US bases, Israeli territory, and Gulf state facilities. Crucially, the Islamic Revolutionary Guard Corps (IRGC) has issued warnings prohibiting vessel passage through the Strait of Hormuz, and is backing those warnings with force.

As of late March 2026, Iran has carried out at least 21 confirmed attacks on merchant ships. Daily transit volumes through the Strait have collapsed from approximately 138 vessels per day before the conflict to as few as 11 on 28 March, according to JMIC reporting. The major container lines—Maersk, MSC, Hapag-Lloyd, and CMA CGM—have all issued guidance to their fleets, and the overwhelming majority of commercial vessels are avoiding the Strait entirely.

Energy Markets in Turmoil

Approximately 27 per cent of the world’s maritime trade in crude oil and petroleum products transits the Strait of Hormuz. The near-total closure of this artery is sending shockwaves through energy markets. Natural gas prices in Asia and Europe have risen by approximately 54 per cent and 63 per cent respectively since the onset of hostilities, while US gas prices have remained relatively flat—reflecting the differing exposure of regional markets to Gulf supply disruption.

The Gulf region also produces nearly half of the world’s urea and 30 per cent of ammonia, with approximately one third of global fertiliser supply transiting the Strait. Urea prices have increased by 50 per cent since the start of the war. The implications for food production costs and food security, particularly in developing economies, are deeply concerning.

Insurance and Commercial Consequences

War risk insurance has become the industry’s most pressing commercial concern. Policies held by shipowners covering the region reportedly include 72-hour cancellation clauses at the discretion of insurers, and premiums have risen to four or five times their pre-conflict levels. For many owners, the cost of war risk cover—combined with the physical danger—renders Gulf trades uneconomic.

The Legal Landscape

The crisis is giving rise to a host of legal and practical issues under English law. The Supreme Court’s decision in The Polar [2024] UKSC 2 remains the leading authority on the relationship between express routing provisions and war risks clauses in charterparties. Owners whose charters specify Gulf port calls or routing through the Strait must consider whether the current hostilities represent a qualitative change in circumstances sufficient to engage the war risks clause and justify deviation or refusal to perform.

Force majeure and frustration are also live issues. The principles confirmed by the Supreme Court in RTI Ltd v MUR Shipping BV [2024] UKSC 29—that a party relying on force majeure is not required to accept non-contractual performance—will be tested in the context of contracts rendered unperformable by the closure of the Strait. Whether the closure amounts to frustration will depend on the duration and totality of the disruption; the courts will be reluctant to find frustration where the interruption is temporary, applying the principles in Edwinton Commercial Corporation v Tsavliris Russ (Worldwide Salvage & Towage) Ltd (The Sea Angel) [2007] EWCA Civ 547.

War risk clauses in charterparties and contracts of carriage are being tested as never before. The allocation of additional war risk premiums between owners and charterers, the scope of liberty clauses to deviate, and the treatment of vessels trapped in the Gulf are all generating urgent legal enquiries. The P&I clubs are issuing guidance at pace.

Compounding the Red Sea Crisis

The Strait of Hormuz crisis comes on top of the ongoing Houthi disruption in the Red Sea, which has now persisted for more than two years. The shipping industry is simultaneously contending with the effective closure of two of the world’s most critical maritime chokepoints. Vessels that had already been rerouted around the Cape of Good Hope to avoid the Red Sea must now also navigate around the Arabian Peninsula to avoid the Strait of Hormuz. The resulting voyage distances, transit times, and fuel costs are unprecedented in the modern era.

Outlook

The duration and ultimate resolution of the conflict remain uncertain. Even if hostilities cease relatively quickly, analysts are cautioning that the normalisation of shipping through the Strait of Hormuz will take months, given the need for de-mining, insurance market recalibration, and the rebuilding of commercial confidence.

What is already clear is that the crisis has fundamentally altered the risk calculus for the shipping industry. The assumption that the world’s great maritime chokepoints would remain open to commerce—an assumption underpinning decades of trade flows, infrastructure investment, and supply chain design—can no longer be taken for granted. The industry must plan for a world in which the closure of critical waterways is not a tail risk but a recurring reality.