Tehran: Tehran's retaliatory closure of the Strait of Hormuz threatens to fuel global inflation pressures and geopolitical risks, following the joint US and Israeli attacks on Iran. Ebrahim Jabbari, a senior adviser to Iran's Revolutionary Guard Corps (IRGC) commander-in-chief, announced the strait's closure to traffic, stating that any vessel traversing the waterway would be targeted. This decision has led to immediate impacts on global energy markets with sharp price rises.
According to Anadolu Agency, the Brent crude oil surged over $79 per barrel, reaching its highest since January 2025. Additionally, Qatari state-owned QatarEnergy announced a complete halt to its liquefied natural gas (LNG) production after Iran hit two of its facilities. Natural gas prices for April futures contracts closed at £43.3 ($50.42) per megawatt-hour at the TTF, representing a significant 35.5% surge in European gas prices compared to the market's previous close on February 27.
The escalating military risks in the strategically vital waterway have severely impacted global maritime insurance markets. Major marine insurers like NorthStandard, the London P and I Club, Gard, Skuld, and American Club have announced cancellation notices due to war risks in Iran and the Persian Gulf. Tamer Kiran, chair of IMEAK Chamber of Shipping, emphasized the cascading effects of the strait's closure on global inflation, production costs, and international supply chains.
Kiran noted the medium-term outlook reveals a decline in global trade volume and broader economic slowdown, while short-term freight rates could increase. He highlighted the importance of the Strait of Hormuz, which accounts for 21 million barrels of oil and derivatives per day, with 85% of the volume directed toward Asia. Any disruption leads to rising energy prices, freight rates, and insurance premiums.
Kiran mentioned alternative transport routes through Saudi Arabia, the United Arab Emirates (UAE), and Trkiye, which have a combined capacity of approximately 10 million barrels, insufficient to fully replace the Strait of Hormuz's daily volume. He advised international commercial actors to strengthen contracts with war risk clauses and diversify routes and supplies. Insurers are also repricing premiums and tightening coverage conditions.
Yucel Acer, a professor of international law and maritime law expert at Ankara Yildirim Beyazit University, explained that international law guarantees 'the freedom of navigation' through such waterways. He noted that while a coastal state may deny passage to specific cargo vessels during wartime, the authority is not absolute, and only Iran can legally block passage within its territorial waters. Acer emphasized that blocking the entire width of the strait would violate international maritime law and provoke a robust international legal response, although the physical military presence continues to deter global shippers.