Strait of Hormuz: Why Its Stability Impacts Global Logistics Costs?

Although a possible ceasefire between Iran and Israel was announced in recent hours, the situation remains highly unstable. The truce has not been formally ratified by both parties, and cross-accusations of agreement violations have already been reported. This reinforces uncertainty regarding the security of the Strait of Hormuz and the operational continuity of key trade routes. 

The Strait of Hormuz connects the Persian Gulf with the Indian Ocean, and is one of the most critical points in international trade.   Through this maritime strip, only 34 km at its narrowest point, approximately 15 million barrels of crude oil per day transit, representing about 20% of global oil and over 25% of liquefied natural gas. Its role is central to global energy security and logistical stability.  Any disruption in this strategic zone has an immediate effect on crude oil prices, marine cargo insurance premiums, and international logistical costs. 

The recent escalation of the conflict between Iran and Israel in June 2025 —marked by bombings, mutual threats, and potential naval retaliations— reignited fears of a total or partial closure of the strait.  

The Iranian Parliament approved a motion to close the passage in Hormuz in retaliation for US bombings. Although not yet ratified, the mere possibility is already having repercussions. In addition to humanitarian risks, these types of events generate: 

• Oil Price Increase: Brent crude surpassed 86 USD/barrel, with an increase of over 12 % since early June, and natural gas prices in Europe rose by 20 %. 
• Increased Financial Volatility: Global energy markets are on alert, impacting cost projections for transportation and production. 
• Shipping Route Adjustments: Cargo typically transiting the Red Sea is being rerouted via the Cape of Good Hope, leading to increased transit times and operational costs. 

From a commercial, logistical, and insurance perspective, some key recommendations include: 

• Diversify Routes and Modes: Explore viable land or riverine alternatives to circumvent critical zones. 
• Review Insurance Clauses: Confirm whether your policy covers risks such as war, sabotage, or maritime route blockades, and if surcharges for high-risk zones are applicable. 
• Strengthen Operational Resilience: Establish alternative suppliers and maintain safety stock to mitigate potential disruptions. 
• Continuous Geopolitical Monitoring: Staying informed enables agile responses to decisions that may impact logistical operations. 

The region through which a significant portion of global crude oil transits is currently at the epicenter of intense geopolitical volatility. Any adverse scenario in Hormuz —be it an intermittent closure, tanker attacks, or naval tension— will almost immediately impact maritime and land transport costs, with cascading effects on final prices, logistical planning, and international contracts. 

In this context, the industry must closely monitor the evolution of the conflict between Israel, Iran, and the U.S., as well as the decisions of the Iranian Parliament and global powers. Proactive anticipation and specialized analysis are crucial for planning logistical coverage, adjusting cargo insurance policies, and providing strategic advice on geopolitical risks. 

Having adequate coverage is important. However, in an uncertain environment, consulting with specialists makes all the difference. 

👉 If your company needs to review its policies, evaluate critical logistical routes, or anticipate disruption scenarios, our people are ready to assist you. 

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