Is the Strait of Hormuz becoming the next Red Sea crisis for global supply chains?

Early on Monday morning, the world woke up to dramatic images of thick smoke rising from one of the Middle East’s most important energy hubs. Two Iranian drones had been intercepted at the enormous Saudi Aramco refinery in Ras Tanura, one of the world’s largest oil processing facilities, and although there were no reported injuries, several processing units were shut down as a precaution. The Saudi defence ministry said local fuel supplies were safe, but the message from the scene was unmistakable: the Middle East’s energy network was now clearly in the crosshairs of a widening conflict.

This news came on a day when oil prices surged sharply across global markets. Brent crude jumped past $80 per barrel, reflecting deep nervousness among traders about supply risks in a region that moves roughly one‑fifth of the world’s oil. European natural gas prices also climbed sharply, as energy markets reacted not only to the refinery incident but also to the ongoing slowdown of tanker traffic through the Strait of Hormuz, the strategic waterway that connects the Persian Gulf to the Arabian Sea.

For the global shipping industry, this was not an isolated story about energy. It was a direct reminder that geopolitical shocks can ripple through the world’s sea freight networks in ways few had fully prepared for.

How it all started: Escalation in the Gulf
The escalation began over a weekend that will now be remembered as a major turning point. The United States and Israel launched military strikes on targets inside Iran. After that, Iran responded, and tensions in the Gulf increased. Iran’s Revolutionary Guard responded in kind, targeting shipping traffic and issuing warnings that transits through the Strait of Hormuz were unsafe. In some cases, Iranian forces used radio broadcasts to signal outright bans on passage, triggering alarm across global shipping markets.

Almost immediately, commercial and government maritime advisories began to pull back war risk protection for voyages into the Gulf. Major marine insurers from Gard to the London P&I Club announced they would cancel or tighten war‑risk coverage for ships operating in and around Hormuz later this week. Without insurance coverage, voyages through the strait become economically risky, pushing many shipowners to avoid the area entirely.

Within hours, vessel movements changed dramatically. Data from tracking platforms showed a sharp drop of roughly 70% in traffic through the Strait of Hormuz, as some ships turned back, others proceeded cautiously, and many waited at anchor or in safer nearby waters.

Carrier response: Shipping chaos unfolds
Major container carriers reacted swiftly. Plans to sail through the Gulf and onward into key Middle East ports were put on hold as safety concerns mounted. In some cases, carriers announced temporary suspensions of bookings to and from ports like Dubai, Doha, or Dammam. In others, vessels were ordered to anchor or proceed to safer waters even if that meant significant delays.

Freightos’ Head of Research, Judah Levine, summed up the situation bluntly: “The US-Israel strikes on Iran and subsequent Iranian retaliation targeting multiple countries in the area are driving significant logistics disruptions in the region which could start to be felt more broadly if the conflict stretches on.”

He pointed out that while Iran hadn’t officially closed the Strait of Hormuz, repeated warnings that transits were unsafe had effectively chilled commercial navigation. That has a direct impact on both oil tanker movements and container ship routings.

Almost at the same time, carriers such as Maersk, Hapag‑Lloyd, MSC, and CMA CGM began pulling back from Gulf transits, rerouting their ships around the Cape of Good Hope instead of hugging the Gulf’s coastline. CMA CGM went further and introduced a $4,000 per FEU emergency surcharge for cargo bound to the affected areas, a clear signal that carriers expect operational costs to rise sharply.

Shortly after carriers began pulling back from the Strait of Hormuz, global freight and logistics planners also started sounding the alarm. Scan Global Logistics, a major international logistics provider, issued a notice warning that the Middle East’s unfolding security situation was already having an “immediate impact on the global transportation and logistics industry.” The advisory highlighted how freight planners, warehouse operators, and terminal operators were adjusting operations and reassessing risk exposures, a sign that the turbulence was affecting not just ocean carriers but the broader ecosystem that moves goods from manufacturer to final customer.

Another blow to normal operations came when DP World suspended operations at Jebel Ali port in Dubai after a fire sparked by debris from an intercepted aerial object disrupted cargo movements. For a few tense hours, one of the region’s busiest ports went silent.

Customers were informed that terminal activity had been paused as a precaution. The move immediately raised concerns across the shipping community, as Jebel Ali is a critical hub for cargo moving in and out of the Gulf.

But the suspension did not last long.

DP World later confirmed that all four terminals at Jebel Ali Port are now fully operational after the temporary precautionary halt. Even though activity has restarted, the brief shutdown showed how quickly events on land can disrupt global trade. When a major hub like Jebel Ali pauses, even for a short time exporters, importers, and shipping lines around the world take notice.

The knock‑on effect was immediate: vessels that normally call at the Gulf’s busiest hubs were being diverted to alternative ports, while cargo owners and forwarders scrambled to adjust plans.

Ripple effects beyond the Gulf: Congestion and secondary chokepoints
As carriers abandoned Gulf routings, analysts began warning about congestion at other ports. Cargo diverted from Hormuz‑linked services was likely to land first at ports in Oman, Sri Lanka, Malaysia, and Singapore, but these hubs have their own limits. Vespucci Maritime’s head, Lars Jensen, warned of port congestion and the risk that even Asia’s major transshipment centres could become bottlenecks if large volumes began to southbound or eastbound in a short span of days.

One vessel tracker showed nearly a hundred containerships still inside the Gulf, sheltering at ports or anchorages because they couldn’t safely transit. Others were riding out the storm outside major ports, waiting for clearer signals that passage might resume.

Voices from the front lines: What industry leaders are seeing
The scale of disruption is visible even to smaller operators and regional forwarders. Kartik Iyer of SVAP Shipping put it simply: “There is no alternate arrangement available at the moment as ships have been suspended to Gulf ports. The impact on the shipping trade is huge.”

He added that the route to the Red Sea is already affected, meaning carriers were dealing with two major chokepoints at once. “Surcharges are expected which will be too costly for exporters to bear,” he said, calling the current situation a long‑term disruption with deep implications for the industry.

From the perspective of project and specialised cargo, Supal Shah, CEO of Sarjak Container Lines, shared a more detailed picture of what delays and uncertainty mean on the ground. He noted that vessel movements through the Gulf have slowed significantly, extending transit times and hurting schedule reliability. Project cargo timelines, already tightly planned, are now at risk of slipping, a prospect that could raise overall infrastructure execution costs.

Supal explained that war‑risk insurance premiums have already jumped, and carriers are applying war‑risk surcharges on Gulf‑bound cargo. Rising crude prices also drive up bunker fuel costs, which cascade into higher freight charges. The risk isn’t limited to shelf prices for shipping but containers parked at ports or Container Freight Stations (CFS) may soon start accruing storage, detention, and demurrage charges if sailings remain disrupted.

What this means for India and energy markets
The Strait of Hormuz is not just a shipping story, it’s an energy story that hits countries like India directly. A large share of India’s crude, liquefied petroleum gas (LPG), LNG, and refined petroleum product imports transit this narrow waterway. As traffic through Hormuz slows to a crawl, Indian refiners have already begun boosting domestic LPG output to make up for potential supply shortfalls.

Oil market analysis shows that even partial disruption can push prices higher. OPEC+ members agreed to increase crude output by about 206,000 barrels per day to try to counter supply fears, but analysts stress that if physical access to export routes like Hormuz remains limited, extra production won’t immediately ease market tightness. Indian analysts say the crisis has not yet created a structural oil supply risk, but the price volatility and macro pressures are clearly felt. Brent crude spiked sharply after weekend attacks, adding geopolitical risk premiums and raising inflation risks in oil‑importing economies.

Wider shipping and cost implications
Supal Shah points out that rising crude and bunker fuel costs affect much more than oil tankers. Freight markets traditionally react quickly to geopolitical risk and energy price shifts, meaning container rates, insurance premiums, and operational costs could see sustained pressure for months.

He said that shipping lines may seek rate adjustments to offset higher fuel and insurance costs, and that freight volatility could persist for four to six months even after conditions stabilise.

That means shippers, carriers, and ports will have to adapt not just to temporary delays but to a new market reality where war‑risk surcharges and suspended routings are part of everyday logistics planning, at least for the near future.

Is the Strait of Hormuz becoming the next Red Sea crisis?
The parallels are striking. Just as the Red Sea turmoil forced carriers to reroute around the Cape of Good Hope and disrupted global schedules, the current Gulf escalation is pushing shipping lines to treat the Strait of Hormuz as an unreliable and dangerous corridor for now.

The question now is whether this will be a short‑term shock to the system or something deeper like a structural change in how trade lanes are planned, carriers deploy capacity, and shippers price risk into their supply chains.

For now, carriers are being cautious, shippers are bracing for higher costs, and ports around the world are watching Gulf traffic fall to a trickle. If the crisis stretches on, this could reshape ocean freight the same way the Red Sea crisis did, a reminder that shipping and geopolitics are inseparable in today’s tightly linked global economy.