Fresh US-Iran Hostilities Slow Hormuz Shipping, Threatening Global Oil Supply Recovery

Fresh US-Iran military exchanges slowed tanker traffic through the Strait of Hormuz on Friday, raising new concerns over global energy supplies just as oil exports had begun recovering through the strategic waterway.The renewed hostilities come just as the International Energy Agency (IEA) reported that global oil supply rebounded by 4.1 million barrels per day (bpd) in June following the partial reopening of the Strait. Despite the recovery, worldwide production remained 9.4 million bpd below pre-war levels.Prior to this week’s attacks, daily tanker traffic through the Strait had recovered to about 40 vessels per day, its highest level since the conflict began, but remained far below the 125 to 140 daily transits recorded before the war.The latest escalation began on Monday after at least three suspected Iranian attacks on commercial vessels sailing outside routes designated by Iran’s Islamic Revolutionary Guard Corps (IRGC). The US responded with strikes on dozens of military targets along Iran’s southern coast, prompting Tehran to launch missile and drone attacks on US bases across the Gulf.US President Donald Trump later declared the memorandum of understanding (MoU) that had established the ceasefire and negotiations “over,” although some officials said technical talks continue.What does the MoU say?The MoU requires Iran to ensure safe navigation through the Strait of Hormuz and waive transit fees for the first 60 days, but leaves open the possibility of future tolls and broader discussions over the waterway’s administration, highlighting lingering disagreements over control of the strategic shipping route.Iran had been repeatedly saying it plans to charge what it calls maritime service fees for crossing the strait, as opposed to tolls. The country, along with Oman, even said last month that they would study the costs to be charged for services, saying they held sovereignty over the waterway.“The international community should interpret Iran’s conditions on transits through the Strait of Hormuz as a clear violation of freedom of navigation and international maritime law,” Rockford Weitz, professor of practice in maritime studies at The Fletcher School at Tufts University, told Forbes Middle East.Weitz added that the Strait of Hormuz is an international waterway under the Law of the Sea, so commercial ships have transit passage rights. Iran would be infringing on those transit rights by imposing conditions on commercial shipping.Shipping costs climb“The recent exchange of fire between Iran and the US has signaled to the market that the Strait of Hormuz is unlikely to return quickly to its previous status quo,” Arman Mahmoudian, research fellow at the University of South Florida Global and National Security Institute and adjunct professor at USF’s Judy Genshaft Honors College, told Forbes Middle East.“Before the latest conflict, markets largely assumed that despite recurring tensions, both sides had strong incentives to keep the Strait open. That assumption has now been weakened,” he added.According to Mahmoudian, Iran increasingly views the Strait as a strategic tool in its confrontation with Washington, creating a new layer of uncertainty for global shipping and energy markets.He warned that normalization depends less on the ceasefire itself than on broader US-Iran relations.“Iranian officials are increasingly discussing tariffs, permission requirements, or other forms of control over shipping,” Mahmoudian said. “Until those questions are clarified, shipping firms, insurers, and energy markets will likely remain cautious.”This renewed uncertainty is already reshaping risk calculations across the shipping industry.Weitz said shipping companies, insurers, and tanker operators have all increased their risk assessments, with marine insurance remaining available but at significantly higher premiums than before the conflict.“Higher insurance, fuel, and crewing costs are all feeding into higher freight rates,” he added.Although Saudi Arabia and the UAE have pipeline infrastructure that allows some crude exports to bypass the Strait through the Red Sea and Fujairah, Kuwait and Qatar remain heavily dependent on tanker traffic through Hormuz.Weitz noted that Gulf countries are accelerating investments in alternative export routes, including new pipelines and rail links, although these projects will reduce—rather than eliminate—the Strait’s strategic importance over the longer term.Uncertain energy outlookThe IEA expects the global oil market to return to surplus later this year if shipping through Hormuz continues to normalize, but both experts cautioned that renewed escalation could quickly derail that outlook.Weitz said US naval and air assets are likely to continue protecting commercial shipping if Iran launches further attacks.Mahmoudian warned that the greatest risks include not only disruptions to shipping but also potential Iranian strikes on regional oil and gas infrastructure, which could simultaneously reduce production and constrain exports.He said governments and investors should closely monitor whether Washington restores sanctions relief on Iran's oil sector, the tone of future diplomatic engagement, and whether commercial vessels can safely continue using shipping lanes near Omani waters.“Until there is greater clarity on US-Iran diplomacy, sanctions relief, maritime routes, and Iran’s intended use of the Strait as a strategic tool,” Mahmoudian said, “the market will remain exposed to renewed disruption.”