Global energy markets shaken as Iran maintains "De Facto" blockade of Strait of Hormuz

• The Strait is effectively closed, with traffic dropping by over 90% since the conflict began. 
• Global oil prices peaked at $120 per barrel and remain highly volatile, currently hovering around $100–$108. 

The global economy remains on edge this week as the Strait of Hormuz, the world’s most vital oil transit chokepoint, remains effectively closed following the onset of the US-'Israeli' war with Iran. What began as a series of military strikes in late February has evolved into a maritime standoff that has paralyzed 20% of the world’s daily oil supply.

The Price of war

The disruption has sent shockwaves through energy markets. According to data tracking the crisis, Brent crude oil prices surged to a peak of $120 per barrel earlier this month as the Islamic Revolutionary Guard Corps (IRGC) moved to block merchant vessels.

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While prices have slightly corrected to current levels of approximately $100 per barrel, analysts warn that the "geopolitical risk premium" remains high. The decrease from the peak is attributed more to a global release of emergency oil reserves by IEA member nations rather than a stabilization of the region itself.

Traffic Comes to a Standstill

New data from Lloyd’s List Intelligence paints a stark picture of the maritime paralysis. From the start of the conflict through Friday, March 13, only 77 ships were recorded transiting the strait. To put that in perspective, during the same period last year, over 1,200 vessels passed through the waterway.

Read more: Iran says ready to allow Japanese vessels through Strait of Hormuz

Current reports indicate a highly selective "permit" system being managed by Iranian authorities:

• India: In a rare diplomatic exception, Iran has reportedly allowed two ships flying the Indian flag to transit.
• Other Nations: While there is ongoing speculation regarding Turkish or Iraqi vessels, sources have yet to disclose if or when they will be permitted to pass.
• The "Shadow Fleet": Experts note that of the few ships still moving, many belong to the "shadow fleet", older vessels often used to skirt international sanctions, which appear more willing to brave the high-risk zone.

International Response

The United States and a coalition of over 20 nations, including the UK, France, and the UAE, have issued a joint statement condemning the "de facto closure" of the strait. While the U.S. Central Command (CENTCOM) recently announced strikes against Iranian missile sites to "re-open" the lane, the waterway remains functionally blocked for most commercial shipping due to sky-high insurance costs and the threat of drone attacks.

As the war enters its fourth week, the World Food Program has warned that sustained energy prices above $100 could push millions more into food insecurity, turning a regional military conflict into a global humanitarian crisis.