Hormuz closure risk

Iran has again shut the Strait of Hormuz to normal shipping after gunboats fired on vessels trying to pass on April 18, according to Iranian state media and wire reports. (apnews.com) The strait is the narrow sea lane between Iran and Oman that carries oil, fuel and liquefied natural gas out of the Gulf. In the first half of 2025, about 23.2 million barrels a day of oil moved through it, equal to 29% of global maritime oil flows, the U.S. Energy Information Administration said. (eia.gov) Gas trade runs through the same bottleneck. The U.S. Energy Information Administration said about 20% of global liquefied natural gas trade crossed Hormuz in 2024, while the International Energy Agency said Qatar and the United Arab Emirates send most of their liquefied natural gas exports through the route. (eia.gov, iea.org) Traffic was already badly reduced before this latest closure order. Lloyd’s List reported in March that transits had fallen by more than 80% after ship strikes and war-risk insurance cancellations, and that about 200 compliant tankers were effectively stranded inside the Gulf. (lloydslist.com, lloydslist.com) Insurance is part of the disruption, not just the shooting. UK P&I told shipowners on March 12 that reinsurers had issued a 24-hour notice of cancellation for Hormuz transit cover because of rising hostilities. (ukpandi.com) That leaves exporters, refiners and importers with fewer workable options. The International Energy Agency says only 3.5 million to 5.5 million barrels a day of pipeline capacity can reroute crude around Hormuz, far below the roughly 20 million barrels a day that normally pass through the strait. (iea.org) For supply chains, the first hit is usually timing and cash. Longer voyages, waiting time at anchor, higher war-risk premiums and cargo re-routing raise freight bills and tie up working capital for buyers waiting on fuel, petrochemicals and other Gulf-linked inputs. (lloydslist.com, commonslibrary.parliament.uk) The shock is heaviest in Asia because most Hormuz crude heads east. The International Energy Agency says about 80% of the oil moving through the strait is destined for Asian markets. (iea.org) British parliamentary researchers said this month that Iran has publicly threatened to shut the route and that almost all non-Iran-linked shipping had already stopped. Tehran has framed control of Hormuz as leverage in its confrontation with Washington, while the United States says its actions are lawful self-defense. (commonslibrary.parliament.uk) What happens next depends less on a formal declaration than on whether shipowners, insurers and navies judge passage to be survivable. If they do not, Hormuz can stay functionally closed even before every tanker stops moving. (lloydslist.com, iea.org)