Strait of Hormuz Crisis Disrupts Global Trade, Energy Supplies

A surge in tensions in the Middle East Gulf is severely disrupting maritime traffic through the Strait of Hormuz, a critical chokepoint for global oil and gas supplies, as well as essential fertilizers. The crisis is forcing shipping carriers to reroute vessels and prompting discussions about alternative transport methods and potential military escorts.

Reduced Transit Volume and Iranian Control

Maritime traffic through the Strait of Hormuz has plummeted. Between March 15 and 17, 2026, only 15 transits were recorded, a significant decrease from the approximately 100 vessels that crossed the strait daily before the recent escalation in conflict Lloyd’s List. Approximately 90% of this limited activity is linked to Iran, either through trade or vessel ownership.

At least 89 ships crossed the Strait of Hormuz between March 1 and 15, including 16 oil tankers, down from roughly 100 to 135 vessel passages per day before the conflict AP News. More than one-fifth of these vessels are believed to be Iran-affiliated, with Chinese and Greek-affiliated ships similarly among those transiting the strait.

Reports indicate that Iran is establishing a registration and monitoring system, run by the Islamic Revolutionary Guard Corps (IRGC), for ships seeking passage. At least nine ships have reportedly secured passage rights, requiring proximity to the Iranian island of Larak for naval control by the IRGC. Lloyd’s List suggests that some vessels have paid as much as $2 million for this right of way.

Impact on Energy Markets and Beyond

The Strait of Hormuz is a vital artery for global energy supplies, with approximately 20 million barrels of oil shipped through the strait each day AP News. Roughly one-fifth of global trade in Liquefied Natural Gas (LNG) also transits the strait, primarily from Qatar and the United Arab Emirates.

However, the impact extends beyond oil and gas. Approximately 1.33 million tonnes of fertilizer are exported monthly through the Strait of Hormuz. In 2024, Asian countries received 35% of urea exports, 53% of sulfur exports, and 64% of ammonia exports from the Gulf Lloyd’s List. India relies on this region for over 40% of its urea and phosphate fertilizer needs, although Brazil imports nearly half of its fertilizer through the strait.

A prolonged closure raises concerns about fertilizer shortages, potentially impacting nitrogen-dependent crops like corn, wheat, and rice. Other major fertilizer producers, including Russia, China, the United States, and Morocco, may lack the capacity to fully offset the potential deficit.

The Gulf region also accounts for 8% of global aluminum supply (5 million tonnes annually) and a third of the world’s commercial helium reserves, essential for medical imaging, aerospace, and microchip manufacturing.

Alternative Routes and Potential Solutions

Gulf exporters are attempting to redirect oil flows through pipelines that bypass the Strait of Hormuz. Saudi Arabia has increased oil transport through its east-west pipeline, boosting flows from an average of 1.7 million barrels per day in 2025 to 5.9 million barrels per day on March 9, 2026, with a projected capacity of 7 million barrels per day. The UAE has also increased exports via the Habshan-Fujairah pipeline, raising flow rates to 1.8 million barrels per day, its maximum capacity. Combined, these pipelines offer an additional capacity of up to 5.5 million barrels per day.

Iraq, Kuwait, and Qatar currently lack alternative export options. Iraq, heavily reliant on its Basra port infrastructure, has been forced to reduce oil production by approximately 70%.

These pipeline alternatives are insufficient, capable of handling only about 15% of the crude currently shipped through the Strait of Hormuz. Analysts suggest that Asian refiners may need to increase purchases of long-haul cargoes from the Atlantic basin, despite the increased shipping distances.

Several governments, including India, Pakistan, Iraq, Malaysia, and China, are reportedly in talks with Tehran to establish a registration and monitoring system overseen by the IRGC Lloyd’s List.

The International Maritime Organization (IMO) has requested the establishment of a secure corridor to evacuate approximately 2,000 vessels and 20,000 sailors stranded in the Gulf. Discussions are underway regarding potential military escorts for tankers, with the United States seeking contributions from allies. Canada, France, the United Kingdom, Italy, Germany, the Netherlands, and Japan have pledged to contribute to efforts to ensure safe navigation, though the nature of their contributions remains unspecified.

Historical Tensions and Future Outlook

While this is the first time the Strait of Hormuz has been effectively blocked, maritime transport has faced disruptions in the past, particularly following the U.S. Withdrawal from the Iran nuclear deal in 2018. Recent weeks have seen damage to numerous refineries, oil fields, and energy infrastructure in the Persian Gulf due to missile and drone strikes.

The likelihood of a cessation of attacks on oil installations remains low, and the ambiguity surrounding international commitments to secure the strait suggests limited immediate impact on the conflict.