BLUF

US-Israeli strikes on Iran have led to the effective closure of the Strait of Hormuz, creating an acute energy shock with significant potential for escalation. With roughly 20% of both global oil and LNG now stranded, the crisis is impacting energy markets and threatening major inflation across Europe and Asia. Closure is de facto rather than enforced, with Iran declaring the strait closed and threatening to destroy any vessel attempting transit, but not yet engaging commercial shipping. Tehran could utilise mining or other hybrid operations to create a multi-month blockade that would be challenging to prevent, with implementation depending on the duration of continued US-Israeli strikes and the regime’s calculus on maximising strategic leverage.

Background

On February 28, 2026, the United States and Israel launched a coordinated campaign targeting Iranian nuclear facilities, ballistic missile infrastructure, and senior leadership. Supreme Leader Ali Khamenei was killed in the opening hours.^[1] Iran retaliated with missile and drone strikes across the Gulf, hitting Qatar, the UAE, Bahrain, Saudi Arabia, Kuwait, and Jordan. Within hours, IRGC commander Ebrahim Jabari declared the strait closed: “If anyone tries to pass, the heroes of the Revolutionary Guard and the regular navy will set those ships ablaze.”^[2] The IRGC also threatened that “oil price will reach $200 in the coming days” and that “not even a drop of oil will reach” the US.^[3]

The Strait of Hormuz

The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea, creating a chokepoint roughly 21 miles wide at its narrowest navigable point between Iran and Oman.^[4] Approximately 20% of the world’s oil and one-fifth of its LNG transited the strait daily as of 2025.^[5] It is the world’s most critical energy chokepoint with no infrastructure alternative capable of replacing its throughput at scale.

Saudi Arabia’s East-West Pipeline (capacity 7 million barrels per day) and the UAE’s Fujairah pipeline offer partial workarounds but fall dramatically short of offsetting full closure.^[6]

Flows through the strait include:

• ~20 million barrels of crude oil per day (~20% of global supply)^[7]
• ~20% of global LNG, primarily from Qatar^[8]
• ~14% of global refined petroleum products^[9]
• ~25% of global fertiliser trade^[10]

Current (De Facto) Closure

Iran has not issued a formal legal blockade, and its foreign ministry has stated it has no intention of officially closing the strait. The strait carries a non-suspendable right of transit passage that cannot be halted even during armed conflict as stated under UNCLOS Article 38.^[11] Iran is a signatory but has not ratified UNCLOS, instead citing its 1993 domestic legislation that classifies the strait as an “innocent passage,” which allows coastal states to restrict or deny passage if they deem it prejudicial to their peace or security. This position is rejected by the US and most maritime powers.^[12]

However, IRGC commanders have explicitly declared the waterway closed and threatened any vessel that attempts transit.^[13] Iran’s own oil and gas exports have largely been halted, and vessel tracking shows traffic has fallen to near zero.^[14] Commercial transit has also effectively collapsed. Major P&I insurance clubs have withdrawn war risk coverage, and Maersk, MSC, Hapag-Lloyd, CMA CGM, and COSCO have all suspended Gulf operations.^[15] The benchmark VLCC freight rate hit an all-time high, surging 94% in a single week.^[16]

Implications

Trump has claimed the conflict will last four to five weeks, with the capability to “go far longer.”^[17] Even without Iranian intervention (such as mining or direct attacks on commercial shipping), it is unlikely the strait will reopen at scale while active US-Israeli strikes on Iranian territory continue. Wartime risks pose too great a threat for commercial insurers to reinstate coverage and major shipping operators to resume transits until the broader conflict concludes.

Energy Prices

While the Strait of Hormuz remains closed, global oil prices will remain elevated.

• European prices rose nearly 50% and Asian prices increased close to 39% within 24 hours of the conflict.^[18]
• QatarEnergy ceased LNG production following Iranian drone strikes on its facilities.^[19] The suspension is expected to remain in place as long as Iranian attacks on Gulf infrastructure continue.
• Saudi Arabia’s Ras Tanura refinery (500,000 barrels per day capacity) ceased production following a drone attack. Air defences intercepted the drones, but further strikes remain a risk.^[20]
• The benchmark VLCC freight rate hit an all-time high of $423,736 per day, marking a 94% increase from Friday’s close.^[21]
• Analysts at Barclays and Royal Bank of Canada have warned that $100-per-barrel oil is a “clear and present danger.” Oxford Economics set its Q2 Brent baseline at $79/barrel, up from a pre-crisis forecast of $64 (assuming an average supply disruption of around 4 million barrels per day over the quarter).^[22]

Shipping Backlog and Rerouting

•       Sustained closure is estimated to leave approximately 100 container ships, 450 oil and gas tankers, and 200 bulk carriers trapped or stranded in the Gulf. Early reporting shows approximately 170 container ships already blocked or waiting in the opening phase.^[23]

•       Maersk has suspended all vessel crossings through the strait and paused Trans-Suez sailings via Bab el-Mandeb. CMA CGM has instructed all vessels to proceed to shelter and reroute via the Cape of Good Hope, which adds 15 to 20 days to Asia-Europe transits.^[24]

•       Hapag-Lloyd and CMA CGM have applied war-risk and emergency conflict surcharges effective March 2. Allianz Research warns of freight rate increases of 15–20%.^[25]

•       Air freight is also disrupted. Dubai, Doha, and Abu Dhabi airports have largely suspended regular operations. Cirium estimates approximately a quarter of regional flights were cancelled by March 1.^[26]

States Affected

China

China is a major consumer of Middle Eastern oil and has pressured Iran to keep the Strait of Hormuz open while simultaneously condemning strikes against Iran.

• World’s largest oil importer and the biggest destination for crude transiting the Strait of Hormuz, totalling 37.7% of all flows as of Q1 2025.^[27]
• China purchases over 80% of Iranian oil exports.^[28]
• Roughly 45% of China’s total oil imports and 30% of its LNG imports pass through the strait.^[29]
• Despite energy reliance, significant short-term disruption is unlikely. China has a buffer of diverse strategic energy reserves. There are 40 to 45 million barrels in floating storage, providing cover for the coming weeks,^[30] and an alleged 90 days of crude oil import coverage.^[31] China is also expected to turn to Russia for energy substitution if the closure continues, with Russia already providing 20% of oil imports.^[32]

Direct involvement remains unlikely at this time.

Europe

European vulnerability is acute, particularly regarding LNG consumption.

• European gas storage is on track to fall below 20% by the end of summer, making the EU’s 80% winter target effectively unreachable.^[33]
• Roughly 30% of Europe’s supply of jet fuel originates from or transits via the strait.^[34]
• Major market impact:
• The Euro STOXX 50 fell 3.3%.^[35]
• Germany’s DAX dropped more than 3% to its lowest level since December 2025.^[36]
• France’s CAC 40 fell 2.9%, and Spain’s IBEX 35 and Italy’s FTSE MIB were both down more than 4%.^[37]
• The euro weakened 0.8% against the dollar to approximately $1.16.^[38]
• Potential expanded imports through Azerbaijan’s Southern Gas Corridor could lessen the strain, but possible volume remains a fraction of the Qatari volumes now blocked.^[39]

South Asia

South Asian states face massive disruption, likely resulting in significant cost inflation rather than immediate shortages. In 2024, 84% of crude and 83% of LNG flowing through Hormuz went to Asian markets.^[40] Given a six-week closure of the Strait of Hormuz and a jump in oil prices from $70 to $85 a barrel, regional inflation in Asia could rise by about 0.7 percentage points.^[41]

• Qatar and the UAE account for 99% of Pakistan’s LNG imports.^[42]
• Qatar and the UAE account for 72% of Bangladesh’s LNG imports.^[43]
• Qatar and the UAE account for 53% of India’s LNG imports.^[44]
• Pakistan and Bangladesh have limited storage and procurement flexibility, meaning disruption would likely trigger fast power-sector demand destruction rather than aggressive spot bidding.^[45]
• Net oil imports make up 4.7% of Thailand’s GDP, with each 10% oil price rise worsening the current account by around 0.5 percentage points of GDP.^[46]

Japan

• Japan depends on imported fossil fuels for 87% of its total energy use.^[47]
• 95% of Japan’s crude oil imports originate from the Middle East.^[48]
• Japan imports approximately 1.6 million barrels per day through the strait.^[49]
• Japan holds approximately 4.4 million tons of LNG in reserves, enough for roughly two to four weeks of stable demand.^[50]
• A sustained closure would widen its trade deficit sharply, weaken the yen, and risk tipping the economy toward stagflation.^[51]

South Korea

• South Korea channels approximately 68% of its crude imports through Hormuz, totalling around 1.7 million barrels per day.^[52]
• Net oil imports make up 2.7% of South Korea’s GDP.^[53]
• South Korean equities dropped 12% in a record one-day fall.^[54]
• Korea holds approximately 3.5 million tons of LNG reserves, enough for roughly two to four weeks of cover.^[55]
• Contingency planning is in progress.
• United States

The United States is comparatively insulated, receiving only 2.5% of crude flows transported through the strait.^[56]Despite non-reliance, increased oil prices will likely raise US pump prices. Secretary Rubio has stated the US will roll out phased measures to mitigate rising energy prices and was seeking to leverage China’s economic relationship with Tehran to apply pressure on strait access.^[57] Notably, the US has denied that the strait is formally closed and has military assets in the region capable of contesting any kinetic enforcement of the closure.

The Mine Threat

Mining poses the most serious threat to prolonged closure in the Strait of Hormuz. Iraqi mine usage during the 1991 Gulf War was highly disruptive and required over a dozen allied mine countermeasure vessels, taking more than two months to clear.^[58] The Iranian case would likely take even longer.

Iran holds an estimated stockpile of at least 2,000 naval mines, an ample quantity to completely disrupt the narrow Strait of Hormuz.^[59] Its arsenal includes drifting and moored contact mines, bottom mines with explosive charges up to 2,200 pounds, and advanced influence mines capable of selectively targeting specific vessel types.^[60] Mines can be laid by small boats, dropped into the water via fixed or rotary-wing aircraft, or deployed by submarine torpedo tubes.^[61] Disrupting deployment efforts would pose a significant challenge.

Iran has a historical precedent for mine use in the strait, having deployed approximately 150 mines in the Strait of Hormuz during the Tanker War of 1988. Tehran may begin with small-scale implementation, using hybrid tactics to preserve legal credibility by capitalising on ambiguity in UNCLOS categorisations.

The US Navy operates minesweepers capable of detecting and destroying mines, but deploying and coordinating a clearance operation under continued Iranian threat would be a significant undertaking with no guarantee of a timeline. It is unlikely sweeping would begin until a ceasefire agreement is reached. Further, Iran’s more advanced influence mines can be calibrated to ignore minesweeping signatures and respond only to the specific acoustic, magnetic, and pressure profile of a laden VLCC.^[62]

Indicators to Watch

• Confirmed or suspected Iranian mine-laying activity near the navigable shipping lanes, particularly reports of IRGC small-boat operations at night or in proximity to the channel.
• Satellite or aerial imagery showing unusual submarine activity at Bandar Abbas or Chah Bahar naval bases.
• Any reduction in IRGC small-boat patrol activity near the strait, which could indicate mines have been laid.
• Growth or reduction of the vessel backlog outside the strait. Growth signals sustained closure; resumption signals potential reopening of transit.
• Chinese-Iranian discourse. Chinese state energy executives are pressing Tehran, and any public signal of Iranian concession or aggression regarding tanker safety would be significant.
• Iranian strikes expanding beyond Gulf energy infrastructure to target US naval assets directly, signalling a shift from deterrence toward active warfare.
• Continued Iranian targeting of Gulf state energy infrastructure, suggesting escalation and a more aggressive trajectory.
• Any Iranian strike on Omani territory or vessels. Oman currently remains a neutral mediator, and attacking it would close that option.
• Continued US or Israeli strikes expanding to Iranian naval infrastructure, particularly Bandar Abbas.
• States such as India or Japan announcing bilateral energy procurement agreements through new market channels, signalling that governments believe the closure will be prolonged and long-term energy solutions must be found.

References

[1] Joseph Stepansky, "Trump Says Iran War Projected to Last 4 to 5 Weeks, Could Go ‘Far Longer,’" Al Jazeera, March 2, 2026. https://www.aljazeera.com/news/2026/3/2/trump-says-iran-war-projected-to-last-4-to-5-weeks-could-go-far-longer

[2] Al Jazeera, "Iran Says Will Attack Any Ship Trying to Pass through Strait of Hormuz," Al Jazeera, March 2, 2026. https://www.aljazeera.com/news/2026/3/2/iran-says-will-attack-any-ship-trying-to-pass-through-strait-of-hormuz

[3] Ibid.

[4] Muhammad Asim Rafiq, Kanwal Riaz, and M. Abu Bakar Chandia, "The Strait of Hormuz and the Law of the Sea," International Journal of Research and Innovation in Social Science IX, no. VII (2025): 3176–84. https://doi.org/10.47772/ijriss.2025.907000258

[5] Al Jazeera, "Iran Says Will Attack Any Ship Trying to Pass through Strait of Hormuz."

[6] Amy M. Jaffe, "Iran, the Strait of Hormuz, and the Ever-Complex Geopolitics of Oil," Council on Foreign Relations, July 3, 2019. https://www.cfr.org/articles/iran-strait-hormuz-and-ever-complex-geopolitics-oil

[7] Al Jazeera, "Iran Says Will Attack Any Ship Trying to Pass through Strait of Hormuz."

[8] Brian Osgood et al., "Iran Updates: US Bases, Embassies Attacked as Tehran Steps up Gulf Strikes," Al Jazeera, March 4, 2026. https://www.aljazeera.com/news/liveblog/2026/3/3/iran-live-news-israel-bombs-tehran-beirut-trump-says-war-to-last-4-weeks

[9] Jaffe, "Iran, the Strait of Hormuz, and the Ever-Complex Geopolitics of Oil."

[10] Robert Rapier, "Beyond Oil: The Strait of Hormuz and the Global Food Risk," Forbes, March 1, 2026. https://www.forbes.com/sites/rrapier/2026/03/01/beyond-oil-the-strait-of-hormuz-and-the-global-food-risk/

[11] Rafiq, Riaz, and Chandia, "The Strait of Hormuz and the Law of the Sea."

[12] Ibid.

[13] Al Jazeera, "Iran Says Will Attack Any Ship Trying to Pass through Strait of Hormuz."

[14] The Guardian, "Iran Has Largely Halted Oil and Gas Exports through Strait of Hormuz," March 3, 2026. https://www.theguardian.com/world/2026/mar/03/iran-has-largely-halted-oil-and-gas-exports-through-strait-of-hormuz

[15] Florence Tan and Emily Chow, "Global Oil, Gas Shipping Costs Surge as Iran Vows to Close Strait of Hormuz," Reuters, March 3, 2026. https://www.reuters.com/world/middle-east/middle-east-oil-shipping-costs-surge-all-time-high-us-iran-conflict-intensifies-2026-03-02/

[16] Ibid.

[17] Stepansky, "Trump Says Iran War Projected to Last 4 to 5 Weeks."

[18] Al Jazeera Staff, "Gas Prices Soar as QatarEnergy Halts LNG Production After Iran Attacks," Al Jazeera, March 2, 2026. https://www.aljazeera.com/news/2026/3/2/qatarenergy-worlds-largest-lng-firm-halts-production-after-iran-attacks

[19] Ibid.

[20] Ibid.

[21] Sam Meredith, "Oil Supertanker Rates Hit All-Time High as Insurers Drop War Risk Protection in the Middle East," CNBC, March 3, 2026. https://www.cnbc.com/2026/03/03/middle-east-crisis-iran-us-shipping-oil-tankers-strait-of-hormuz.html

[22] Yuval Molina Obedman, "Energy Price Shock Looms over Europe as War on Iran Rattles Markets," Courthouse News Service, March 3, 2026. https://courthousenews.com/energy-price-shock-looms-over-europe-as-war-on-iran-rattles-markets/

[23] ECG Association, "Single Article," The Association of European Vehicle Logistics, February 28, 2026. https://www.ecgassociation.eu/article/?id=ae8bfe3f-d6d8-4832-9dfb-16d18d0c9bb3

[24] Ibid.

[25] Ibid.

[26] Ibid.

[27] Niccolo Conte, "Charted: Oil Trade Through the Strait of Hormuz by Country," Visual Capitalist, March 3, 2026. https://www.visualcapitalist.com/charted-oil-trade-through-the-strait-of-hormuz-by-country/

[28] Tsvetana Paraskova, "China Pressures Iran to Keep Strait of Hormuz Open to Oil and Gas Flows," OilPrice.com, March 3, 2026. https://oilprice.com/Latest-Energy-News/World-News/China-Pressures-Iran-to-Keep-Strait-of-Hormuz-Open-to-Oil-and-Gas-Flows.html

[29] Medhi Bouzouina, "US-Israeli Strikes on Iran Put China’s Energy Security at Risk," France24, March 3, 2026. https://www.france24.com/en/middle-east/20260303-us-israeli-strikes-on-iran-put-china-s-energy-security-at-risk

[30] Ibid.

[31] 杨怡, "Energy Security Remains Robust Despite Risks," Chinadaily.com.cn, March 3, 2026. https://global.chinadaily.com.cn/a/202603/03/WS69a5becca310d6866eb3b273.html

[32] Artur Kryzhnyi, "China May Lean on Russian Oil Due to War in Middle East," Ukrainska Pravda, March 4, 2026. https://www.pravda.com.ua/eng/news/2026/03/04/8023812/

[33] Molina Obedman, "Energy Price Shock Looms over Europe as War on Iran Rattles Markets."

[34] Megha Bahree, "Shutdown of Hormuz Strait Raises Fears of Soaring Oil Prices," Al Jazeera, March 3, 2026. https://www.aljazeera.com/economy/2026/3/3/shutdown-of-hormuz-strait-raises-fears-of-soaring-oil-prices

[35] Piero Cingari, "Eurozone Inflation Sees Unexpected Rise: Is the Worst Yet to Come?," Euronews, March 3, 2026. https://www.euronews.com/business/2026/03/03/eurozone-inflation-sees-unexpected-rise-is-the-worst-yet-to-come

[36] Ibid.

[37] Ibid.

[38] Ibid.

[39] Molina Obedman, "Energy Price Shock Looms over Europe as War on Iran Rattles Markets."

[40] Punit Oza, "The Strait of Hormuz Crisis and Its Devastating Impact on Asia-Gulf Trade," Seatrade Maritime, March 4, 2026. https://www.seatrade-maritime.com/tankers/the-strait-of-hormuz-crisis-and-its-devastating-impact-on-asia-gulf-trade

[41] Anniek Bao, "Middle East Conflict Poses Fresh Test to Central Banks as Oil Shock Fuels Inflation," CNBC, March 4, 2026. https://www.cnbc.com/2026/03/04/iran-israel-us-war-middle-east-conflict-oil-gas-lng-surge-central-banks-inflation-risk.html

[42] Lee Ying Shan, "The Strait of Hormuz Is Facing a Blockade. These Countries Will Be Most Impacted," CNBC, March 4, 2026. https://www.cnbc.com/2026/03/03/strait-of-hormuz-closure-which-countries-will-be-hit-the-most.html

[43] Ibid.

[44] Ibid.

[45] Ibid.

[46] Ibid.

[47] Srishti Chhaya, "The Strait That Moves the Market: The 2026 Strait of Hormuz Crisis and the Anatomy of a Global Energy Shock," Atlas Institute for International Affairs, March 4, 2026. https://atlasinstitute.org/the-strait-that-moves-the-market-the-2026-strait-of-hormuz-crisis-and-the-anatomy-of-a-global-energy-shock/

[48] Ibid.

[49] Ibid.

[50] Shan, "The Strait of Hormuz Is Facing a Blockade."

[51] Chhaya, "The Strait That Moves the Market."

[52] Ibid.

[53] Shan, "The Strait of Hormuz Is Facing a Blockade."

[54] William Sandlund, "South Korean Stocks Hit Hardest by Iran War as Market Plunges 12%," Financial Times, March 4, 2026. https://www.ft.com/content/bab415ba-59d4-4b31-bcd4-2fb448fa3fd6

[55] Shan, "The Strait of Hormuz Is Facing a Blockade."

[56] Conte, "Charted: Oil Trade Through the Strait of Hormuz by Country."

[57] Al Jazeera, "Iran Says Will Attack Any Ship Trying to Pass through Strait of Hormuz."

[58] The Strauss Center, "Strait of Hormuz – Mines." https://www.strausscenter.org/strait-of-hormuz-mines/

[59] Ibid.

[60] Ibid.

[61] Ibid.

[62] Ibid.