Strait of Hormuz grinds to a halt as Iran strikes rattle global energy markets

Few places on the planet matter as much to the global economy as the Strait of Hormuz.

About 21 miles wide at its narrowest, the Strait of Hormuz between Iran and Oman is a global energy bottleneck. The waterway carries about 20 million barrels per day and about a fifth of the world’s liquefied natural gas, making it a prime target in the event of conflict in the region.

This is why the latest disruption, triggered by US-Israeli strikes Over the weekend and retaliatory Iranian drone and missile attacks in the region, are forcing shippers to rethink whether it is safe to transit this key waterway.

A satellite view of the Strait of Hormuz, a critical point for global energy supplies, connecting the Persian Gulf to the Gulf of Oman. (Gallo Images/Orbital Horizon/Copernicus Sentinel Data 2025/Amanda Macias/Fox News Digital)

“The Strait of Hormuz has essentially stopped,” said Matt Smith, an analyst at Kpler, a data and analytics company.

He said the slowdown is not necessarily because Iran has officially closed the waterway, although Tehran has threatened to do so, but because carriers are weighing the risk of missile or drone strikes in the narrow corridor.

GAS PRICES COULD JUMP AS MIDDLE EAST TENSIONS THREATEN GLOBAL OIL SUPPLY

The result, Smith said, is a growing bottleneck of raw and refined products. And if the disruption extends from a few days to a few weeks, Smith warned, the fallout could intensify quickly.

“If this lasts for weeks, the consequences will be enormous,” he said, pointing to the early ripple effects already being felt in global energy markets.

These concerns are already changing behavior in the shipping sector.

Maersk, widely seen as a benchmark for global shipping, said it would suspend all ship crossings through the Strait of Hormuz until further notice and warned that service to Arabian Gulf ports could be delayed.

Insurers are also backing down. Major marine insurers including Gard, Skuld, NorthStandard, the London P&I Club and the American Club have announced they will cancel their war risks cover from this week. Under the changes, war risk coverage would be excluded in Iranian waters as well as the Gulf and neighboring waters, the notices said.

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A ship is seen near the Strait of Hormuz on March 1, 2026. (Sahar Al Attar/AFP/Getty Images)

With ships being sidelined and insurance tightening, pressure is now being felt on the production side.

The disruptions also affect production on the ground. Qatar halted its production of liquefied natural gas (LNG) on Monday after Iran struck two of its gas facilities. Saudi Arabia, meanwhile, suspended operations at its largest oil refinery after an Iranian drone attack sparked a fire.

Smith said the repercussions are spreading quickly: Iraq is starting to cut production, some Asian refineries are reducing production, and Qatar has declared force majeure, a formal notification to buyers that it may not be able to deliver exports as promised because of the conflict.

“It’s only going to get worse if this continues for weeks rather than days,” Smith said, warning that oil prices could reach “levels we’ve never seen before” if the disruptions continue.

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