Global shipping and energy markets are on maximum alert as the Strait of Hormuz is turning into a “watery grave” for international trade.
In a shock intervention, the former Supreme Allied Commander of NATO, retired admiral James Stavridis, warns that the area is now essentially closed, with the resumption of traffic appearing to be a scenario that could take months.
More than 20,000 sailors are trapped in a zone of fire, while the threat of 5,000 Iranian mines and the drones of Tehran’s “mosquito fleet” has paralyzed insurance coverage.
As the United States attempts to curb the naval capabilities of the Islamic Revolutionary Guard Corps, oil prices are on a trajectory toward an explosion above 100 dollars, threatening to blow up the global economy.
Trapped sailors, oil prices on a fiery trajectory
In the Strait of Hormuz, approximately 20,000 sailors from various countries have been trapped aboard tankers, while ships of the United States Navy appear reluctant to approach the area.
Oil prices continue to climb, something that appears to benefit Russia, but analysts point out that increases have their limits.
The Iranian Deputy Foreign Minister, Kazem Garibabadi, made clear that Iran will not allow commercial and warships of “hostile countries” to pass through the Strait of Hormuz.
At the same time, the Deputy Commander of the Central Headquarters of the Khatam al-Anbiya Military Command, Kayumars Heydar, clarified that Iran has not closed the strait and regulates ship traffic according to international protocols.
However, the situation has caused major disruption in shipping.
Arsenio Dominguez, Secretary General of the United Nations International Maritime Organization, stated that 20,000 sailors have been trapped due to the interruption of traffic.
Already on 2 March, an adviser to the commander of the Islamic Revolutionary Guard Corps (IRGC) had declared bluntly: “We will burn any ship that attempts to pass through the Strait of Hormuz.
We will not allow even a drop of oil to leave this region.”
Despite the warnings, some ships managed to pass.
According to the platform S&P Global Commodities at Sea, only two tankers passed through the strait on 2 March, while MarineTraffic recorded that there were no tankers that day.
Nevertheless, more than 250 tankers were located off the coast of the United Arab Emirates and between Oman and Iran, together with approximately 70 bulk cargo and container ships at the entrance of the strait.
Major insurance companies, such as Gard, Skuld, NorthStandard, London P&I Club and American Club, began canceling war risk insurance coverage for ships passing through the strait.
The military tension pushed the price of Brent oil above 80 dollars per barrel already on 2 March, while the limited flow of hydrocarbons created congestion in storage facilities of Gulf countries.
Russia benefited significantly, with shares of oil and gas companies recording increases of 3–10%.
Despite reports of a full closure of the strait, the United States did not detect Iranian patrol boats or mines until 3 March.
However, on 4 March, the Islamic Revolutionary Guard Corps reiterated that the strait will remain closed, with the Deputy Commander of the Navy, Mohammad Akbarzadeh, stating that more than ten tankers had been attacked with missiles.
The container ship Safeen Prestige, flying the flag of Malta, suffered damage from an unknown projectile approximately two nautical miles north of Oman, resulting in its crew abandoning the vessel.
On 5 March, the United States Secretary of Energy, Chris Wright, announced that American military personnel will escort commercial ships in the strait, while on the same day the Islamic Revolutionary Guard Corps reported a fire on an American tanker in the northern Persian Gulf.
The naval forces of the United States remain extremely cautious.
The price of oil exceeded 84 dollars per barrel, while natural gas prices in Europe and Asia almost doubled.
Analysts warn that the American-Israeli operation against Iran has significantly weakened the naval presence in the region.
The main threat to shipping in the strait remains drones, while maritime routes may also be mined.
Iran has abundant capacity for this thanks to its “mosquito fleet”.
Kpler reports that tanker transit has fallen by 90% due to the escalation of the conflict.
The strait, which connects the Persian Gulf with the Gulf of Oman and the Arabian Sea, constitutes the only passage for the region’s oil exports, with a width of 39 to 96 kilometers and territories shared by Iran and Oman.
Up to 20% of global oil exports and up to 30% of LNG exports from Persian Gulf countries pass through the strait, with the largest volumes heading to Asia, China, India, Japan and South Korea.
Iran exports more than 90% of its oil through the strait.
Igor Yushkov, analyst at the National Energy Security Fund (NESF), estimates that the price increase will be gradual, with the market adjusting as the price reaches 100 dollars or more.
Bloomberg reports that 140 million barrels of Russian oil have accumulated at sea, temporarily limiting upward pressure on prices.
As long as the strait remains closed, oil prices will continue to rise, with attacks on the region’s oil infrastructure maintaining pressure.
The United States and Israel may target Iran’s infrastructure, keeping prices high even after the strait reopens.
Iran is currently exporting 1.5 to 2 million barrels per day, a significant figure that keeps markets on alert.
Even with the resumption of traffic in the strait, prices are expected to remain high if attacks on infrastructure continue.
Iran can turn the Persian Gulf into a minefield
As Admiral Stavridis points out in his analysis in Bloomberg, as war rages across the Middle East, all naval eyes are focused on the Strait of Hormuz.
This narrow water corridor connecting the Persian Gulf with the open waters of the Indian Ocean is essentially closed.
Normally, about 20% to 25% of the world’s oil and natural gas flows southward from the gulf to global markets.
Some crude can be transported through land pipelines, but the disruption is significant and will worsen over time.
Iran has closed the strait through a combination of threats from short range ballistic missiles along the coast, armed fast boats and small speedboats equipped with machine guns and rockets that can surround large slow moving tankers.
This triple threat is enough to frighten the insurance industry, which has essentially stopped supporting shipments.
President Donald Trump, in a social media post, pledged to provide insurance “at a very reasonable price” for ships passing through the strait, without however giving many details.
For now, many ships are simply anchoring while waiting for instructions from the nervous headquarters of shipping companies.
How long can Iran keep the Strait of Hormuz closed?
What can the United States and its allies do?
I have crossed the strait dozens of times as a naval officer since the late 1970s.
It is a very difficult passage purely from a navigation standpoint.
As Stavridis notes, “I carried out the passage under dangerous conditions similar to today in the mid 1980s, escorting tankers during the Iran-Iraq War as part of Operation Earnest Will.
Iranian missiles often targeted our ship and their fighters flew over us.
As a tactical action officer authorized to use weapons, I was a nervous young sailor.
I also led commercial ship convoys, a strategy that is probably being considered today as well.”
American military personnel are working hard to reduce the naval capabilities of Iran.
The naval base of the Islamic Revolutionary Guard Corps in Bandar Abbas has been attacked, and according to the Pentagon, almost 20 Iranian ships have been sunk, one of them by an American submarine in the Indian Ocean.
But this may not be as destructive as it sounds, Iran began the war with twelve frigates and corvettes, several attack and patrol fast boats, and hundreds, if not thousands, of small speedboats capable of harassing civilian shipping.
And many of the ballistic missiles along the coasts of the strait remain fully operational.
Until the Pentagon neutralizes most threats, commercial ships are unlikely to want to risk the passage, whether they are insured or not.
Even if Iran’s naval forces are severely degraded, another very insidious and deadly danger remains, mines.
Iran used mines four decades ago against the Iraq of Saddam Hussein.
It has also, the admiral says, been preparing for decades for a blockade operation of the Strait of Hormuz and likely possesses more than 5,000 mines, a single explosion can cause serious damage to a tanker.
The Iranians can place them secretly with small boats, submarines and even civilian vessels such as the common dhows of the Gulf.
If the United States does not neutralize the mines now and the Iranians place a large number of them in the strait, the most valuable ships in the Gulf will become the minesweepers.
The United States has approximately three to six minesweepers in the Gulf, and its allies and partners, including Saudi Arabia and the United Kingdom, could contribute approximately the same number.
MH-53E Sea Dragon helicopters can also be used.
The Task Force 59 naval force in Bahrain, which focuses on robotic and unmanned vehicles, is also experimenting with technology for mine clearing.
Minesweepers are vulnerable and could be used only after the Iranian naval threat is completely neutralized.
And believe me, even under the best conditions, mine clearing is a very slow process, says James Stavridis.
“I have seen American vessels, the best in the field, need weeks to clear a field of a few hundred mines.
Detection technology, sonar and magnetic sensors, is bulky and may not be reliable depending on sea conditions.
Floating mines are particularly dangerous for the minesweepers themselves,” he notes and continues: Initially a sea lane will be cleared, but if the Iranians use floating mines, ships will have to clear the passage almost continuously. The complete clearing of the Strait of Hormuz may take several months.
The Navy needs more minesweepers.
For now, the situation in the Gulf is critical and requires additional clearing operations, aircraft and Littoral Combat Ships properly equipped.
Both frigates and aircraft can be loaded onto larger vessels, and some are likely already heading toward the Gulf.
LCS vessels are fast and some are already in the area or heading toward it.
Global energy supplies demand it, Stavridis concludes.
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