The conflict between Iran and the United States disrupts a vital maritime route and puts the international shipping sector at risk

Strait of Hormuz Conflict Disrupts Global Shipping

Birds soar beside a vessel in the Strait of Hormuz, seen from Musandam, Oman, as tensions escalate between the U.S., Israel, and Iran. (Photo: Amr Alfiky / Reuters)

Major Shipping Route Faces Severe Disruption

The ongoing conflict involving Iran has severely impacted a crucial maritime passage, threatening significant delays in the movement of goods to the United States and beyond.

The Strait of Hormuz, a slim channel bordering southern Iran, is responsible for transporting about 20% of the world’s oil, as well as vital commodities such as aluminum, sugar, and fertilizers.

Threats and Shipping Restrictions

Iranian state media reported that a top Revolutionary Guard commander declared the strait closed, warning that any vessel attempting passage would be attacked. While Iran lacks the means to physically block the strait, the threat alone has deterred many ships from entering the area.

Since the onset of hostilities, leading shipping and logistics firms—including Maersk, MSC Group, CMA CGM, Hapag-Lloyd, COSCO, and Emirates SkyCargo—have either limited or suspended operations through this region.

Global Supply Chain Faces Delays

With ships forced to reroute around Africa’s Cape of Good Hope, experts anticipate weeks-long shipping delays, increased port congestion, and the breakdown of “just-in-time” inventory systems, which depend on precise delivery schedules for raw materials.

“If major carriers avoid the strait and divert vessels, global shipping timelines are extended by weeks,” explained Mahmoud Abuwasel, managing partner at Wasel & Wasel. “This effectively reduces available shipping capacity.”

Abuwasel emphasized that today’s supply chains are heavily reliant on timely logistics. Cargo ships play a pivotal role in moving goods worldwide, with over 80% of products transported by sea.

“When shipping times are prolonged, the system falters,” Abuwasel noted. “Delays in raw materials and components disrupt manufacturing, which ultimately leads to product shortages and higher prices for consumers.”

Smoke rises following an explosion at Iran’s Bandar Abbas port along the Strait of Hormuz. (Photo: Planet Labs)

Industries at Risk

Abuwasel warned that sectors such as automotive manufacturing and electronics could experience slowdowns or stoppages. Prolonged conflict may also delay shipments of pharmaceuticals, medical equipment, and temperature-sensitive goods.

Historical Context and Current Concerns

Historically, the economic effects of geopolitical crises have tended to be short-lived. For instance, last year’s U.S.-Iran tensions briefly pushed crude oil prices to $80 per barrel before stabilizing, and the Strait of Hormuz avoided major disruption.

Escalation and Insurance Impacts

This time, analysts believe the situation is more severe. Jorge León, head of geopolitical analysis at Rystad Energy, remarked that the scale of Iran’s response has far exceeded previous incidents, creating an unpredictable environment for global markets.

Trade interruptions are also driving up shipping costs, as insurers withdraw existing policies and renegotiate coverage at higher rates. Insurance broker Marsh has forecasted that premiums could surge by up to 50% in the near term. With at least one oil tanker already damaged, Marcus Baker of Marsh Global expects insurance costs could double.

“Crews now face the real risk of entering dangerous waters, a consideration that weighs heavily on ship owners,” Baker said.

On Monday, an unmanned boat attack in the Gulf of Oman resulted in the death of a crew member and forced the evacuation of the remaining 21 crew, according to Oman’s Maritime Security Center.

Reuters also reported that tankers are being stranded and damaged. Ken Fichtelman of McGill and Partners anticipates that insurance rates could more than double, not only in the Persian Gulf but in other high-risk regions as well.

A navy ship sails through the Strait of Hormuz, a critical route for global oil and gas shipments. (Photo: Sahar Al Attar / AFP - Getty Images)

Broader Economic Effects

Fichtelman added, “Premiums for shipping through the Red Sea and other conflict zones are likely to increase as well. When insurers start paying out claims, rates rise globally.”

However, both insurance experts noted that it remains difficult to quantify the full impact on consumers at this stage. “Most are adopting a wait-and-see approach as the situation evolves,” Fichtelman said.

Rising crude oil prices typically translate into higher fuel costs, which can drive inflation. Shipping disruptions also increase transportation and production expenses, leading to delays, congested ports, and wider supply chain shocks.

If elevated prices persist, consumer spending may decline, slowing global economic growth. This mix of sluggish growth and rising inflation—known as stagflation—poses a challenge for the Federal Reserve, which aims to bring inflation down to 2%.

Although inflation has eased to 2.4% as of January, it remains above the central bank’s target. Should the conflict cause another inflation spike, interest rates may stay high for an extended period.

This article is adapted from NBCNews.com.