Strait of Hormuz Crisis Deepens as U.S.-Israel War with Iran Continues

More than a week into the U.S.-Israel war on Iran, traffic through the Strait of Hormuz has dwindled to virtually nothing, sending ripples through global oil markets and escalating international anxieties. The situation has prompted U.S. President Donald Trump to suggest the U.S. Navy might escort merchant vessels through the crucial strait, a move that carries significant risks and currently lacks a concrete plan despite Trump’s efforts to reassure markets.

Disrupted Shipping and Rising Insurance Costs

Initially, shipping watchers focused on insurance rates for vessels navigating the perilous Strait of Hormuz, with insurers appearing to cover all deals. However, the landscape has shifted. While some insurance, particularly war insurance, remains available, coverage is now largely unavailable for ships linked to the United States and Israel. Maritime war insurers are providing the most comprehensive coverage, but overall risks remain exceptionally high.

As of March 6, 2026, only 44 to 45 ships had transited the strait since the beginning of the month, a 90 percent decrease in normal traffic, according to Lloyd’s List Intelligence [1]. The few vessels attempting the voyage include those within the Iranian “shadow fleet” and some operated by Dynacom, a Greek firm. Even within the Gulf, ships have been targeted, along with a Qatari liquefied natural gas plant and an oil rig off the Saudi coast.

Global Economic Implications

The disruption extends far beyond oil and gas, as nearly a quarter of the world’s supply passes through the strait. Aluminum processing in the Gulf region is too affected, with aluminum prices up by more than 27 percent year-on-year. 20-30 percent of global fertilizer ingredients ordinarily transit the strait, potentially impacting agricultural yields worldwide. According to researchers Nima Shokri and Salome M.S. Shokri-Kuehni at the United Nations University, disruptions to nitrogen-based fertilizer shipments could lead to millions of tonnes of lost crops [4].

Human Cost and Historical Precedent

The conflict is not without human cost. As of March 6, 2026, at least 10 ships have been hit by drones or missiles since the war began, resulting in the deaths of at least three seafarers and two port workers [2]. This echoes the Tanker War between Iran and Iraq in the 1980s, during which 451 ships were attacked and over 300 seafarers were killed or went missing.

The majority of seafarers currently in harm’s way originate from lower-income economies, with over 13 percent from the Philippines, more than 10 percent from Russia, and nearly 6 percent from India.

U.S. Response and Iranian Defiance

President Trump proposed a U.S.-backed insurance program offering “a level of security no other policy can provide,” with coverage up to $20 billion, through the U.S. International Development Finance Corp. (DFC) [3]. However, the shipping industry’s response has been muted due to unresolved terms and the requirement to shift to U.S. Insurers.

The Islamic Revolutionary Guard Corps (IRGC) of Iran has responded defiantly to the prospect of U.S. Navy escorts, reminding the U.S. Of the 1980s Tanker War incident involving the supertanker Bridgeton, which was damaged by IRGC mines while under U.S. Navy escort.

Escalating Economic Concerns

The ongoing disruption is impacting the flow of oil, gas, aluminum, fertilizer, and other commodities. China, a major buyer of Iranian oil, has reserves of three to six months and has halted diesel and gasoline exports. Gulf energy buyers are already experiencing price increases. The United Arab Emirates relies on the Strait of Hormuz for 80-90 percent of its barley, corn, and wheat imports, and Saudi Arabia is similarly dependent. Qatar’s energy minister has warned that the war could “bring down the economies of the world,” potentially forcing Gulf energy exporters to halt production and driving oil prices to $150 a barrel [4].

The situation remains volatile. If President Trump declares victory within days, the disruption may be manageable. However, a prolonged conflict could have far-reaching and devastating consequences.