Strait of Hormuz Blockade: Global Trade's Long Road to Recovery

The effective closure of the Strait of Hormuz, initiated on February 28, has severely disrupted global energy and trade flows. This blockade impacts approximately 20 percent of the world's crude oil and liquefied natural gas (LNG) supplies, contributing to worldwide energy price increases. Beyond oil and gas, exports of petrochemicals, fertilizers, and raw materials have also been interrupted.

Shipping and trade experts warn that the disruption to supply chains will persist long after the waterway reopens. Currently, around 2,000 ships are stranded, with many diverted or waiting for passage. Clearing this backlog, coupled with damage to energy and transport infrastructure across the region, will likely take months.

Experts suggest that the conflict has fundamentally altered the risk environment for shipping. The emergence of asymmetric threats, such as unmanned attack capabilities, necessitates a sustained period of stability and credible security assurances before operations can return to normal. Rebuilding shipper confidence in the strait's safety could take years.

Consequently, insurance premiums for war risk coverage have surged by up to 300 percent. To return to normal rates, a permanent resolution and 100 percent security guarantee are required. This situation is pushing companies to explore alternative trade routes and diversify their supply chains, a trend accelerated by geopolitical uncertainties, potentially leading to a long-term decline in traffic through the Strait of Hormuz.