The ongoing conflict between the United States and Iran has reached a dangerous stage, with the Strait of Hormuz, one of the world’s most crucial oil routes, emerging as the centre of direct confrontation.
On one side, US President Donald Trump has warned Iran that its power plants could be ‘blown up’ if the strait is not kept open. On the other, Iran has made it clear that it will not bow to pressure. Tehran has also maintained that it has not officially closed the Strait of Hormuz.
Iran’s Foreign Minister Abbas Araghchi said firmly that neither insurance companies nor Iran would be intimidated by such threats. He added that it would be better to engage in respectful dialogue. Araghchi also clarified that while the strait remains open, the ongoing conflict has created abnormal conditions, making ships hesitant to pass through.
Strait open, but under strict Iranian control
Iran has stated that shipping traffic through the Strait of Hormuz is continuing, but under much tighter security regulations.
Ships linked to enemy nations or their allies could be stopped. Even vessels from neutral countries are required to coordinate with Iranian authorities before passing through. Only those ships that comply with the newly imposed safety protocols will be allowed transit.
Tehran has described these measures as part of its ‘right to self-defence,’ stressing that it will not allow the strait to be used against its interests.
Rising conflict impacting global stability
Since the US-Israel strikes began on February 28, Iran has intensified its retaliatory actions. American bases in the Gulf region have reportedly been targeted, along with energy facilities in Qatar, Saudi Arabia, and the United Arab Emirates.
There have also been warnings about laying naval mines in the Strait of Hormuz and stopping ships, raising concerns across the region. The situation has increased instability and has directly impacted global oil prices.
Countries dependent on Middle East oil feel the pressure
The crisis is having a major impact on countries heavily reliant on Middle Eastern oil. Japan, which imports over 90% of its oil from the region, has stepped up diplomatic efforts.
According to reports, discussions have already taken place between Iran and Japan regarding safe passage for ships. Japan’s Prime Minister, during a meeting with Donald Trump, reportedly highlighted that the conflict poses a serious threat to the global economy.
Why ships are avoiding the route despite it being open
Although Iran insists the Strait of Hormuz is not closed, the real issue lies elsewhere, insurance.
Large oil tankers and cargo ships cannot operate without insurance coverage. Ship owners rely on insurance companies to protect the vessel, cargo (such as oil and gas) and crew. In case of an attack or sinking, the financial losses, often worth billions, are covered by insurers.
However, when conflict breaks out, affected sea routes are classified as ‘war zones.’ Due to the heightened risk, insurance companies either refuse to provide coverage or increase premiums drastically, sometimes by five to ten times.
As a result, many shipping companies avoid the route altogether. This means that while the passage may technically remain open, in practical terms it functions as if it were closed.
