Original Title: How the Strait of Hormuz Has Become a Weapon of War
Original Author: Julian Lee and Alex Longley, Bloomberg
Translation: Peggy, BlockBeats

Editor’s Note: The crisis in the Strait of Hormuz is transforming from a military conflict into a global energy trade stress test.

The key change in recent developments is that the ceasefire has not truly restored navigation. In early May, the U.S. announced the launch of “Project Freedom,” aiming to guide stranded ships out of the Persian Gulf; Iran warned external warships not to enter the strait. Subsequently, the U.S. and Iran engaged in a new round of clashes near Hormuz, with the U.S. claiming to have intercepted attacks by Iran on three U.S. ships, while Iran accused the U.S. of violating the ceasefire, attacking vessels, and coastal areas. Although Trump stated that the ceasefire remains in effect, markets have begun to reprice the risks, with Brent crude oil prices once rising near $101 per barrel.

Iran has demonstrated that even without a traditional powerful navy, it can threaten the world’s most important energy corridor through drones, small boats, mines, access permits, and fee mechanisms, causing the route to become semi-paralyzed. For shipowners, insurers, and oil-producing countries, the issue is no longer just “whether ships can pass,” but “how much risk must be borne each time.”

This means that the costs of the Strait of Hormuz are being re-priced. In the past, it was a default available infrastructure for global energy trade; now, it is becoming a geopolitical bargaining chip in Iran’s hands. Even if the U.S. and Iran reach an agreement in the future, shipping recovery will be difficult to immediately return to pre-conflict levels because what has truly been damaged is not just the waterway itself, but the market’s trust in its safety.

Below is the original article:

No region in the world produces more oil and natural gas than the countries bordering the Persian Gulf. Most of their energy exports rely on tankers passing through the Strait of Hormuz — which has actually been blocked for over two months.

Since the attack by the U.S. and Israel at the end of February, Iran has restricted ships from passing through the strait. Iran refuses to reopen this vital shipping route unless the U.S. lifts its maritime blockade on Iranian ports. In early May, tensions escalated again, nearly threatening the stability of the ceasefire agreement. Previously, U.S. President Donald Trump announced the launch of an operation called “Project Freedom,” aimed at guiding stranded ships out of the Persian Gulf.

The economic impact of the blockage of the Strait of Hormuz continues to accumulate worldwide. As prices for oil, natural gas, and other commodities rise, supply tightens. Even if the U.S. and Iran eventually break the deadlock in peace negotiations and agree to lift the blockade, free navigation may not fully resume. Iran has signaled its intention to use its de facto control over the Strait of Hormuz as a weapon in future confrontations.

The Strait of Hormuz, a vital waterway for global oil trade

How War Affects Hormuz

How does Iran’s war impact shipping through the Strait of Hormuz?

Since the outbreak of war on February 28, Iran has periodically attacked ships in the Persian Gulf and surrounding waters, causing most shipowners to hesitate to risk personnel injuries, cargo losses, or vessel destruction when attempting to pass through the Strait of Hormuz. The daily number of ships passing through the strait has dropped from about 135 during peacetime to fewer than 10.

Meanwhile, Iran continues to transport its own oil through the strait. It also allows some other ships to pass, usually along a corridor hugging the Iranian coast; sometimes, Iran demands payments of up to $2 million from these vessels.

After the outbreak of war, vessel traffic through the Strait of Hormuz plummeted. The chart shows the number of merchant ships passing through the strait.

Even after the warring parties agreed to a ceasefire in early April, traffic through the strait remained nearly stagnant. Starting April 13, the U.S. began imposing blockades on ships that had docked at or were heading to Iranian ports, attempting to pressure Iran’s oil exports and force the regime to restore the “free passage zone” in the Strait of Hormuz.

So far, Iran has successfully resisted the blockade pressure. According to Iranian semi-official Tasnim News Agency, in early May, Iran even expanded the area it claims to control in the Strait of Hormuz. As the deadlock persists, the U.S. military reports that over 1,500 merchant ships are currently stranded in the Persian Gulf. With crude oil storage space exhausted, oil-producing countries in the region have been forced to halt most of their production.

What conditions are needed to reopen the Strait of Hormuz?

Even if a peace agreement is reached, it’s unlikely that normal navigation through the Strait of Hormuz will be immediately restored. Shipowners need confidence that reopening will be sustainable and safe. One concern is the potential mine threat. Iran has indicated it has laid mines along the most commonly used routes in the narrow strait. Clearing these mines could take several weeks.

Some shipping operators may be unwilling to pass through the strait without military escort. The U.S. Navy does not have enough ships to protect the more than 100 vessels that typically transit daily, and the Trump administration has struggled to persuade allies to deploy naval forces immediately. The UK and France are leading efforts to form a multinational coalition to help restore shipping in the Strait of Hormuz after the conflict ceases.

Even if escort arrangements are finalized, clearing the backlog of ships on both sides of the strait could take weeks. The narrowness of the waterway limits the number of ships that can be escorted at once and makes the convoy more vulnerable to attack.

Trump announced that starting May 4, the U.S. would launch “Project Freedom,” guiding neutral ships away from the Persian Gulf. He did not specify further details, but U.S. Central Command said it would provide military support, including missile destroyers, aircraft, and drones. Iran called this move “Project Deadlock,” accusing it of violating the ceasefire agreement.

What does Iran’s long-term strategy for the Strait of Hormuz mean?

Shipowners, insurers, and clients have already seen that for Iran, which has almost no traditional navy, it is not difficult to quickly halt passage through the Strait of Hormuz; restoring normal operations, however, is much more challenging.

If a U.S.-Iran peace deal cannot eliminate Iran’s threat to Hormuz shipping, the economic logic of this critical trade route could change over the coming years. Cautious ship operators might decide that passing through the strait is not worth the risk under any circumstances. Higher insurance premiums could also weaken Gulf trade’s competitiveness compared to other regions.

Iran has signaled that even if the war ends, it intends to continue controlling passage through the Strait of Hormuz and monetize its influence over this waterway. The Iranian parliament is pushing a bill to enshrine sovereignty over the strait into domestic law and establish a formal fee system for ships passing through.

On April 18, oil tankers anchored in the Strait of Hormuz. Source: Associated Press images

Energy Corridor Repricing

Where is the importance of the Strait of Hormuz reflected?

The Strait of Hormuz connects Iran to the north, the UAE and Oman to the south, linking the Persian Gulf with the Indian Ocean. It is about 100 miles (161 km) long, with the narrowest point about 24 miles wide. The two-way channels are each only 2 miles wide.

For the energy markets, this strait is a crucial route, carrying about one-fifth of the world’s oil and liquefied natural gas supplies. Under normal circumstances, Saudi Arabia, Iraq, Iran, Kuwait, Bahrain, Qatar, and the UAE export crude oil through the Strait of Hormuz, most of which is shipped to Asia.

Gulf countries also operate multiple refineries producing large quantities of diesel, aviation fuel, naphtha—used in plastics and gasoline—and other petroleum products, which are exported globally via this waterway.

Beyond energy, the Strait of Hormuz is a vital passage for aluminum, fertilizers, and even helium—used in semiconductor manufacturing.

Can oil-producing countries bypass the Strait of Hormuz?

Kuwait, Qatar, and Bahrain have no alternative maritime export routes.

Saudi Arabia transports the most oil through the Strait of Hormuz and has partially rerouted some crude via a pipeline extending westward to the Red Sea port of Yanbu. Saudi Aramco plans to fully utilize this pipeline’s capacity of 7 million barrels per day, although only about 5 million barrels per day are currently available for export, with the rest for domestic use.

However, the Red Sea route is not without risks. Iran has attacked a refinery in Yanbu and struck a pump station on the east-west pipeline; Houthi rebels supported by Iran have also threatened to resume attacks on Red Sea shipping.

UAE can also somewhat bypass the Strait of Hormuz, but its backup capacity is limited, and Fujeirah port has been attacked by Iran before. This port is at the end of a pipeline connecting UAE oil fields to the Gulf of Oman. Additionally, Iraq is trying to restore exports via Jordan and Syrian ports, but current plans only account for a small fraction of its usual exports through Hormuz.

Does Iran have the right to control the Strait of Hormuz?

According to the United Nations Convention on the Law of the Sea, coastal states can exercise sovereignty over waters within 12 nautical miles (about 14 miles) of their coastlines, called territorial waters.

The Strait of Hormuz passes through Iran’s and Oman’s territorial waters. However, countries must allow foreign ships to “innocently passage” through their territorial waters and cannot impede “innocent passage” or “transit passage” through straits used for international navigation. The convention also states that countries cannot charge fees solely because foreign ships pass through their territorial waters.

Although Iran signed the UNCLOS in 1982, it has never ratified the treaty.

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