Hormuz traffic plunges as shipping risks mount

Traders Union
All News
Geopolitics & Trade
Hormuz traffic plunges

Highlights

Hormuz shipping has nearly stopped.
Traffic is down about 90%.
Energy supply risks remain high.

Shipping through the Strait of Hormuz has virtually come to a standstill. Only five cargo vessels passed through the strait on Saturday, while none were recorded on Sunday, compared with 31 vessels the previous weekend, according to Kpler data. The slowdown had already begun earlier in the week, when traffic fell to its lowest level in three months, CNBC reported. The scale of the disruption is particularly clear compared with the period before the conflict began on Feb. 28, when around 130 vessels passed through the strait each day.

Shipping retreats as security risks mount

The latest slowdown means traffic is roughly 90% below prewar levels, a severe constraint for a route that normally carries about one-fifth of global oil supplies. Shipowners face not only the possibility of renewed hostilities but also sharply higher insurance and security costs.

Those risks intensified after two tankers operated by the United Arab Emirates state-owned ADNOC were attacked by drones while transiting Hormuz on Aug. 14. No casualties were reported, but the incident reinforced doubts over whether commercial shipping can return to normal while the dispute over control and security of the waterway remains unresolved.

The effects extend beyond crude oil. Qatar, one of the world's largest liquefied natural gas exporters, has few practical alternatives to Hormuz for seaborne LNG shipments. Continued interruptions therefore threaten both oil and gas flows from the Gulf and can raise transport, insurance, and ultimately consumer costs.

Oil markets hold their nerve

Brent crude futures rose 0.45% to $88.92 per barrel, while West Texas Intermediate (WTI) crude futures gained 0.61% to $81.85 per barrel.

The relatively muted response reflects competing pressures. The physical threat to Gulf exports remains severe, but weaker global oil demand has helped prevent the disruption from producing another immediate price surge. The International Energy Agency expects global demand to decline by 1.6 million barrels a day this year.

A critical energy chokepoint

Hormuz remains the central vulnerability in the Gulf energy system. With shipping operating at only a fraction of its prewar level, even limited attacks can discourage vessels from returning and keep freight and insurance costs elevated.

The immediate question is therefore broader than whether the 60-day diplomatic window formally expires. Without a durable security arrangement, the strait could remain severely constrained even in the absence of full-scale fighting, leaving global oil and LNG markets exposed to repeated supply shocks.

We also reported oil supply risks rise as U.S.-Iran Hormuz dispute hardens.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.