Closure of the Strait of Hormuz Leads to Significant Decline in Global Shipping Traffic

The closure of the Strait of Hormuz, a critical maritime passage, has caused significant disruptions in global shipping, impacting approximately 80 percent of the world's trade. Traffic through the 33km (21-mile) strait has decreased from over 100 vessels daily to just five, following the onset of the United States-Israel war on Iran six months ago. This situation has severely affected the flow of oil, gas, and goods worldwide. According to the United Nations Conference on Trade and Development (UNCTAD), nearly all consumer goods, from fuel to food, are transported by sea at some point. The Strait of Hormuz is particularly vital for energy trade, accounting for over one-third of global seaborne crude oil and liquefied petroleum gas (LPG) flows. Richard Matthews, director at Gibson Shipbrokers, noted that the closure represents a significant constriction of a major chokepoint, as there are no alternative maritime routes available. The week before the conflict began, crude oil flows through the strait represented about 38 percent of the global total. Since the war began, crude exports from the Gulf region have dropped by nearly half, from about 17 million barrels per day in 2025 to approximately nine million barrels per day as of August 2026. The average daily exports of crude oil through the strait have fallen to just 2.2 million barrels per day. Traffic through the strait collapsed following US-Israeli strikes on Iran, with the Iranian Revolutionary Guard Corps announcing the closure on March 2, leading to a sustained average of five vessels per day. An interim agreement in June temporarily increased traffic to 20 vessels, but the US blockade resumed in July, causing traffic to drop back to five vessels. The current situation has resulted in a nearly 95 percent decrease in traffic compared to pre-war levels. The remaining vessels are primarily tankers operating under naval escort or with tracking systems disabled. The closure has redirected global shipping flows, with traffic shifting towards the Red Sea and Southeast Asia, where Singapore and Malaysia have become key hubs for redirected energy. Countries reliant on Middle Eastern oil, such as Eritrea and Madagascar, are experiencing increased prices and longer wait times for shipments. The crisis has also led to significant declines in port traffic across various countries, with Kuwait seeing an 86 percent drop in daily port calls. The impact of the Hormuz crisis has been felt through rising oil prices, which are approximately 20 percent higher than before the war. Experts suggest that while prices have increased, the oil and shipping markets have shown resilience, aided by previously built inventories. Matthews indicated that the next six months could be critical for inventory levels if the situation does not improve.