Persian Gulf Conflict Disrupts Shipping, Threatens Oil Supply and Price
Surge
Tankers have begun to steer clear of the
region and the Strait of Hormuz, threatening to push up energy prices.
1.
Conflict Spreads to Key Energy Corridor:
Military strikes by the United States and Israel on Iran
triggered regional instability, affecting major oil and gas routes.
2.
Strait of Hormuz Traffic Falls Sharply:
Ship movements through the Strait of Hormuz — which handles about 20%
of global oil supply — declined significantly as shipping firms avoided the
area.
3.
Iran Issues Warning to Ships:
Iranian military sources warned that passage through the strait was “unsafe,”
though U.S. officials said there was no confirmed blockade attempt.
4.
Shipping Companies Pull Back:
Major carriers began rerouting or halting voyages through the region, with some
executives stating vessels would avoid the strait entirely during the conflict.
5.
Oil Market Shock Expected:
Analysts, including those from S&P Global, warned of a likely oil market
shock when trading resumes, with prices already up around 20% this year.
6.
Key Producers at Risk:
Disruptions could restrict exports from major oil producers such as Saudi
Arabia, Iraq, and Iran. While some Gulf states have alternative export routes,
others like Iraq and Qatar rely heavily on Hormuz.
7.
Potential Escalation Scenarios:
Iran could attempt to restrict passage using:
o
Naval mines
o
Missile strikes
o
Fast attack boats
8.
Voluntary Shipping Pause Could Raise Prices:
Even without a formal blockade, a temporary halt in tanker movement could
significantly reduce supply and push oil prices higher.
9.
Red Sea Shipping Also Affected:
The conflict may further delay any large-scale return of container shipping to
the Red Sea, where Houthi attacks had previously disrupted trade routes.
10.
Energy Production Impact:
Israel temporarily halted some offshore natural gas production as a
precautionary measure.
11.
Historical Perspective:
Experts note the Strait of Hormuz has never been fully closed since large-scale
Middle East oil production began, and past disruptions were usually temporary.
Overall
Outlook:
The widening Persian Gulf conflict has rapidly
impacted global shipping and energy logistics, heightening the risk of
sustained oil price increases depending on the duration and severity of
disruptions in critical maritime routes.
The
widening military conflict in the Persian Gulf quickly began to disrupt
shipping in one of the world’s biggest oil-and-gas producing regions,
threatening to send energy prices soaring.
Oil
markets were closed on Saturday when the United States and Israel launched
attacks on Iran that spurred retaliatory strikes across the Middle East.
But
shipping companies quickly began trying to steer clear of the region and the
Strait of Hormuz, a narrow waterway on Iran’s southern border through which
ships typically carry about one-fifth of the world’s oil and a significant
amount of natural gas to market.
Traffic
through the strait fell considerably during the course of the day on Saturday,
according to research firms that track tanker movements.
The
Iranian military had cautioned ships to avoid the area, saying that “passage
through the strait is currently unsafe,” according to Tasnim, a news outlet
affiliated with the Islamic Revolutionary Guard Corps. But a U.S. official said
there was no evidence Iran was attempting a military blockade of the strait.
Any
sharp and prolonged reduction of tanker traffic through the strait, even a
voluntary curtailment by shipping companies, could significantly cut the flow
of oil from big producers, including Saudi Arabia, Iraq and Iran, and push up
prices.
“This
will be a shock to the oil market,” said Daniel Yergin, a Pulitzer
Prize-winning energy historian and vice chairman of the research firm S&P
Global.
The
U.S. Department of Transportation on Saturday warned commercial shipping to
stay away. “It is recommended that vessels keep clear of this area if
possible,” the agency said in a statement.
“Nobody’s going to enter right now,” Angeliki
Frangou, the chief executive of Navios Maritime Partners, a Greek shipping
company with vessels in the region, said, referring to the strait.
Countries
such as Saudi Arabia and the United Arab Emirates have other ways of exporting
some of their oil, but other major producers in the region, including Iraq and
Qatar, do not have such options, according to the Center
for Strategic and International Studies.
The
United States has taken military action in oil-producing regions several times
during President Trump’s second term, including in Venezuela in January and in
Iran last June. In each of those instances, the oil market reaction was
relatively muted, partly because the world has been well supplied with oil.
This
time may be different. Analysts widely expect global oil prices, which ended
Friday near $73 a barrel, to climb considerably when markets open on Sunday
evening. Prices are already up about 20 percent so far this year.
The
big question is how long prices will remain elevated. Elliott Abrams, who
served as a special representative for Iran during the first Trump
administration, said the magnitude and duration of any price increase would
most likely depend on whether Iran targets energy assets in the region.
“The
question for me is what are the Iranians hitting today and what will they hit
tomorrow?” said Mr. Abrams, now a senior fellow at the Council on Foreign
Relations.
Ms.
Frangou, the shipping executive, said the attacks might have a bigger impact on
shipping than the conflict last year because Iran’s leaders, fearing that they
will be removed, could take more drastic actions.
Iran
could try to stop tankers going through the Strait of Hormuz with mines, or by
targeting vessels with missiles or sending out attack boats.
Even
if Iran takes no military action to close the Strait of Hormuz, shipping and
oil companies are choosing not to send vessels through the strait. And even a
short pause could significantly cut the supply of oil and help push up prices.
“It’s
just simply unfeasible for commercial ships to transit in a time of war,” said
Jaime Brito, an executive director at OPIS, A Dow Jones Company.
Some
analysts said they did not expect the conflict to lead to a lengthy pause in
shipping in the Strait of Hormuz. No country has closed the strait since large
scale oil production began in the Middle East, said Eugene Gholz, an associate
professor of political science at the University of Notre Dame and expert on
the Strait of Hormuz.
In
past conflicts, oil tankers often resumed their passage through the strait
after a pause, Mr. Gholz said. “They might stack up
for hours or even a couple of days, and then usually, as things clarify,
tankers will start to move again,” he said.
Soon
after the strikes began, Israel’s Energy Ministry said it had ordered a
temporary halt to natural gas production at some offshore sites.
The
conflict between the United States and Israel and Iran could also affect
commercial shipping traffic through the Red Sea, another crucial maritime lane
in the Middle East. The Houthi militia in Yemen started attacking vessels in
the Red Sea soon after the conflict between Gaza and Israel that began in 2023.
After the Houthi attacks subsided last year, global shipping companies were
considering sending their vessels back to the Red Sea, but shipping analysts
said a return was now unlikely.
Peter
Sand, chief analyst at Xeneta, a shipping market analytics company, said in an
email that the strikes on Saturday “shatter hopes of a large
scale return of container shipping to the Red Sea in 2026.”