NEED TO KNOW

• The IRGC declared the Strait of Hormuz closed March 2 after US-Israeli strikes killed Supreme Leader Ali Khamenei on Feb. 28 — halting roughly 20% of the world's daily oil supply
• Between 180 and 200 tankers are stranded on both sides of the strait; Brent crude has surged more than 13% since the conflict began, with analysts warning of $100-per-barrel or higher
• Iran barred US, Israeli and European-allied vessels; China is in active negotiations with Tehran to secure passage for its own ships, with one vessel already transiting by switching its AIS flag

DUBAI, UAE (TDR) — The Strait of Hormuz has effectively ceased to function as a commercial corridor for the seventh consecutive day, with between 180 and 200 tankers stranded on both sides of the 21-mile-wide waterway as Iran's Islamic Revolutionary Guard Corps maintains its threat to strike any unauthorized vessel attempting transit. The shutdown — triggered by joint US-Israeli strikes on Iran that killed Supreme Leader Ali Khamenei on Feb. 28 — has removed approximately 20 million barrels of oil per day from global markets, rattled energy prices worldwide and exposed the fragility of a chokepoint that analysts have long identified as the single greatest vulnerability in global energy supply.

The Strait of Hormuz Crisis and How It Unfolded

The sequence was swift. Within hours of Operation Epic Fury — the coordinated US-Israeli air campaign that struck Iranian military facilities, nuclear sites and senior leadership on Feb. 28 — the IRGC began broadcasting warnings via VHF radio to vessels in the strait. By March 2, a senior IRGC official formally declared the waterway closed.

"The strait is closed. If anyone tries to pass, the heroes of the Revolutionary Guard and the regular navy will set those ships ablaze." — Ebrahim Jabari, senior IRGC adviser

"We will also attack oil pipelines and will not allow a single drop of oil to leave the region." — Ebrahim Jabari, IRGC

Iran did not need a conventional naval blockade to achieve its objective. As energy analyst Kevin Book, co-founder of Clearview Energy Partners, told NPR: drone strikes in the vicinity of the strait were sufficient to trigger an insurance-driven shutdown. Once war-risk coverage was withdrawn — with protection and indemnity insurance removed for March 5 — the economic calculation became impossible for most operators.

"All Iran had to do was several drone strikes in the vicinity of the Strait of Hormuz. And all of a sudden, insurers and shipping companies decided that it was unsafe to traverse that very narrow S-curve of that waterway. It's really an insurance-driven shutdown." — Kevin Book, Clearview Energy Partners

Maersk and Hapag-Lloyd suspended transits. Major oil companies and trading houses followed. Ships rerouting around Africa's Cape of Good Hope face 10 to 15 additional days at sea and sharply higher fuel costs. The Suez Canal simultaneously saw reduced traffic as Houthi forces in Yemen resumed attacks on Red Sea shipping the same day strikes on Iran began, closing that alternate corridor as well.

Global Energy Markets and the $100-Per-Barrel Threshold

The numbers are stark. Brent crude surged to $83.84 per barrel in early trading — a seven-month high — representing more than a 13% increase since the conflict began. Analysts at Kpler warn that a sustained disruption could push prices toward $100 per barrel or higher. More extreme projections — including estimates of $130 to $300 per barrel in a worst-case scenario — have circulated among risk analysts tracking the Asia-Gulf trade corridor.

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European natural gas markets have been similarly destabilized. Prices nearly doubled within days, spiking from €30 per megawatt-hour before the strikes to above €60 on March 3, before partially retreating.

Qatar halted LNG production at Ras Laffan Industrial City after Iranian drone strikes hit its facilities, compounding the supply shock. Qatar is the world's largest LNG exporter, and roughly 20% of global LNG trade transits Hormuz. The tanker rate for Very Large Crude Carriers jumped from $120,000 to $420,000 per day as the glut of stranded vessels shrank available capacity.

Iraq began shutting down operations at the Rumaila oil field on March 3 due to a lack of storage space, as tankers could not depart. The Stimson Center estimates that even with Saudi Arabia's East-West Pipeline and Abu Dhabi's bypass routes operating at capacity, a serious Hormuz disruption could still remove 8 to 10 million barrels per day from world supply.

Asia Bears the Brunt — and China's Diplomatic Play

The countries most exposed are not in the West. The US is the world's largest oil producer and imports less than 0.9 million barrels per day from the Gulf region. Europe receives only 5% of its crude via Hormuz. Asia is a different story entirely.

China, India, Japan and South Korea account for 69% of all crude flows through the strait. Japan sources nearly three-quarters of its oil imports through Hormuz. South Korea relies on it for roughly 60%. India faces exposure on both oil and gas — about 60% of its crude and more than half its LNG imports are Gulf-linked.

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Pakistan has already pivoted, asking Saudi Arabia to route oil supplies through the Red Sea port of Yanbu as an emergency measure. Islamabad confirmed one vessel has been arranged to sail to Yanbu to lift crude.

Iran's formal position has been that vessels belonging to the US, Israel, European nations and their allies are barred from transit. Whether — and how explicitly — Russia and China have been granted exceptions remains a contested question. Iranian state media and at least one outlet reported the carve-out as a "strategic gesture of gratitude" for Beijing and Moscow's diplomatic backing. But Iran's official announcement made no explicit mention of China, and Reuters — citing three diplomatic sources — reported that Beijing is actively negotiating with Tehran to secure safe passage for crude and Qatari LNG vessels, suggesting the arrangement is not yet settled.

Ship-tracking data captured one vessel switching its AIS designation to "China-owner" before successfully transiting — a tactic Reuters noted while cautioning that far more sailings will be needed to stabilize markets.

China's foreign ministry called publicly for an immediate ceasefire and maritime safety, with spokesperson Mao Ning urging all parties to "maintain the safety of shipping lanes in the Strait of Hormuz and prevent a greater impact on the global economy." The framing underscored Beijing's awkward position: nominally sympathetic to Tehran diplomatically, but materially harmed by the blockade that Tehran created.

"China urges all parties to immediately cease military operations, avoid further escalation of tensions, maintain the safety of shipping lanes in the Strait of Hormuz, and prevent a greater impact on the global economy." — Mao Ning, Chinese Foreign Ministry spokesperson

US Response: Navy Escorts and Pressure Toward De-escalation

President Donald Trump has signaled that the US Navy will begin escorting tankers through the strait "as soon as possible," posting on Truth Social that the US would ensure the "free flow of energy to the world." The Fifth Fleet and allied task forces have moved to high alert, though no direct challenge to the blockade has occurred.

Undersecretary of Defense Elbridge Colby testified before the Senate Armed Services Committee that the US is pursuing "scoped and reasonable objectives" in Iran and is not seeking regime change through force. When pressed on why the campaign began with the killing of Khamenei, Colby declined to comment directly.

Republicans in Congress have begun privately signaling concern about the operation's trajectory if it extends further, according to the New York Times.

"No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD." — President Donald Trump, Truth Social

As the blockade stretches into a second week with no diplomatic resolution in sight, the question confronting every major economy is whether the insurance markets, pipeline workarounds and emergency reserves can absorb what the Strait of Hormuz normally moves — and for how long.

Sources

This report was compiled using information from Al Jazeera, NPR, Reuters via the Jerusalem Post, Bloomberg, CNBC, and Business Today, shipping and market analysis by Kpler, Windward Maritime AI, Seatrade Maritime, and Table.Media, geopolitical analysis from the Stimson Center, and energy data from the US Energy Information Administration.

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