Strait of Hormuz Traffic Down 90%. Here's What That Means for Your Supply Chain.
The Strait of Hormuz is effectively closed -- 20% of global oil transits this chokepoint. Here's who's exposed, what's cascading, and what to watch next.
The Strait of Hormuz handles 20% of global oil and 20-25% of global LNG. Since late February 2026, traffic is down over 90%. The International Energy Agency is calling it the largest supply disruption in the history of the global oil market.
A 45-day ceasefire proposal landed on April 6. Neither side has accepted. The situation is volatile and unresolved.
What Happened
On February 28, 2026, the US and Israel launched joint military strikes on Iran, killing Supreme Leader Ali Khamenei. Iran's IRGC retaliated with missile and drone attacks on US bases, Israeli territory, and Gulf state infrastructure -- then prohibited vessel passage through the Strait of Hormuz.
Tanker traffic dropped 70% immediately. Over 150 ships anchored outside the strait. Within days, traffic fell to near zero. Maersk, CMA CGM, and Hapag-Lloyd all suspended transits.
On the same day, Houthi-controlled Yemen resumed attacks on commercial ships in the Red Sea, forcing Suez Canal traffic to reroute around the Cape of Good Hope -- adding 10-14 days to transit times.
By late March, Iran announced a selective blockade: ships from China, Russia, India, Iraq, Pakistan, Malaysia, and Thailand were granted passage. Everyone else was shut out.
Why It Matters
This isn't a shipping inconvenience. It's the largest energy supply disruption ever recorded.
Energy. Gas prices hit $4/gallon in the US -- a 30% surge. Europe is in worse shape. European gas storage sat at just 30% capacity after a harsh winter, and Qatari LNG -- which Europe depends on -- transits through Hormuz. The EU is facing its second major energy crisis in four years.
Materials. Shortages are cascading beyond energy. Fertilizers, aluminum, helium, and petrochemicals all flow through the strait. Agriculture, manufacturing, and consumer goods are exposed globally.
Shipping costs. Rerouting via the Cape of Good Hope adds 10-14 days and significantly higher fuel and insurance costs per voyage. Carriers are passing those costs through. Spot freight rates have spiked across Asia-to-Europe and Middle-East-to-Europe lanes.
Insurance. War risk premiums for Gulf transit are at historic highs. Many mid-size carriers have simply stopped quoting for the region entirely.
Who Is Exposed
Logistics and industrial operators with multi-site, cross-border supply chains. If any of your raw materials, components, or finished goods transit the Gulf or depend on petrochemical feedstocks, your lead times are already extended. Fertilizer-dependent agriculture operations and chemical manufacturers are seeing input costs spike.
Critical infrastructure and data center operators. Europe's energy grid is under pressure. Power price volatility is hitting data center operating costs. Any facility with single-source energy contracts tied to LNG is exposed.
Insurance and reinsurance. Business interruption claims are climbing. Marine cargo insurers are repricing Gulf-adjacent risk. Property insurers with exposure to energy-dependent manufacturing are recalculating.
Humanitarian organizations. Fuel rationing in South Asia (Bangladesh, India, Pakistan) is disrupting logistics for aid delivery. Strategic reserves are being depleted. The cascade from energy to food security is already underway.
What to Watch
The ceasefire proposal. Egyptian, Pakistani, and Turkish mediators sent a 45-day ceasefire proposal to both Iran and the US on April 6. Neither side has responded. Trump has set a Monday night deadline -- if no deal, he's threatened strikes on Iran's power plants and infrastructure. If the ceasefire holds, expect 2-3 months before shipping normalizes. If it doesn't, expect further escalation and sustained disruption through Q2.
European gas storage. At 30% capacity, Europe has limited buffer. If LNG flows don't resume before summer injection season, winter 2026-2027 becomes a crisis. Watch TTF futures as the leading indicator.
The selective blockade's ripple effects. China, Russia, and India can still transit Hormuz. Western-aligned carriers cannot. This is creating a two-tier global shipping system with different cost structures, transit times, and risk profiles. Companies sourcing from the Gulf through Western carriers are at a structural disadvantage.
Sources: Wikipedia - 2026 Strait of Hormuz crisis, CNBC, Kpler, Brookings, Janes, Gulf News, CBC News, CNN, Al Jazeera
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