Strait of Hormuz closure sends shockwaves through global energy markets

2026-03-03 - 10:12

Iran's decision to close the Strait of Hormuz to maritime traffic has unleashed turbulence across global energy markets and raised fears of prolonged economic disruption, following the joint US-Israeli military campaign against Tehran. Ebrahim Jabbari, a senior adviser to Iran's Revolutionary Guard Corps commander-in-chief, announced Monday that any vessel traversing the strategic waterway would be targeted, effectively shutting down one of the world's most critical energy arteries. Energy prices surge The impact was immediate and dramatic. Brent crude oil surged past $79 per barrel on Monday, reaching its highest level since January 2025 as markets absorbed the reality of disrupted supply routes. European natural gas prices recorded an even more stunning jump, with April futures contracts closing at €43.3 ($50.42) per megawatt-hour on the TTF Dutch hub, a massive 35.5% increase from the previous close on February 27. Qatari state-owned QatarEnergy announced a complete halt to its liquefied natural gas (LNG) production after Iran hit two of its facilities, removing a major source of global gas supply from the market. Insurance markets in turmoil The escalating military risks in the strategically vital waterway have severely impacted global maritime insurance markets. Major marine insurers including NorthStandard, the London P&I Club, Gard, Skuld, and American Club issued cancellation notices due to war risks in Iran and the Persian Gulf, leaving shipowners scrambling for coverage. Insurance premiums are being repriced and coverage conditions tightened as underwriters reassess the dangers of transiting what has become a active conflict zone. Economic cascading effects Tamer Kiran, chair of IMEAK Chamber of Shipping, warned that the strait's closure will have cascading effects on global inflation, production costs and international supply chains. "The medium-term outlook reveals a massive decline in global trade volume and broader economic slowdown, while short-term freight rates may increase," Kiran told Anadolu. He noted that the Strait of Hormuz handles approximately 21 million barrels of oil and derivatives daily, with some 85% of that volume directed toward Asia. Alternative pipeline routes through Saudi Arabia, the UAE and Türkiye offer combined capacity roughly 10 million barrels short of fully replacing the strait's daily volume. Legal dimensions and practical realities Yucel Acer, a professor of international law and maritime law expert at Ankara Yildirim Beyazit University, explained that while international law guarantees "freedom of navigation" through such waterways, the situation is legally complex. "The strait's waters are divided among Iran, Oman, and the UAE; however, regardless of the status of ownership, all vessels retain the right of innocent passage without prior permission," Acer said. He noted that only Iran can legally exercise the right to block passage within its territorial waters portion of the strait, and any attempt to block the entire width would constitute a clear violation of international maritime law. However, he acknowledged that despite legal protections, the physical military presence and threat continue to deter global shippers. Kiran advised that any Turkish vessels in the region or Turkish shipowners planning voyages should urgently reroute, as the closure shows no signs of immediate resolution.