US Navy declines to escort Hormuz ships.
As the U.S.-Israel war against Iran continues, the U.S. Navy declined to provide escorts for commercial shipping through the Strait of Hormuz, raising risks to global trade.
The U.S. Navy's decision against providing escorts contradicts earlier statements from President Trump, who said the U.S. would provide naval escorts if needed. This divergence highlights the severity of the risk assessment by the Navy. Shipping activity through the Strait of Hormuz has significantly decreased, with some reports indicating a drop of as much as 90%. This decline is due to security risks and increased insurance costs, leading many shipping companies to suspend operations. Hundreds of vessels are stranded, and some are diverting to safer routes. The Strait of Hormuz is a critical chokepoint for global energy trade, with about one-fifth of the world's oil and seaborne gas tankers passing through it. Disruptions in this area have already caused oil prices to surge, with Brent crude rising significantly since the start of the conflict. The closure also impacts the supply of liquefied natural gas (LNG) and fertilizers, potentially worsening access for some of the poorest countries. The situation in the Strait of Hormuz is increasing shipping costs, including freight rates and war risk insurance premiums. Some analysts warn that sustained disruptions could trigger a global recession, with oil prices potentially reaching $100 to $200 per barrel. The UNCTAD has warned that developing economies are particularly vulnerable to these disruptions due to high debt and rising borrowing costs.
