The president of the Piraeus Chamber of Commerce and Industry, Vasilis Korkidis, explains, in an article, the possible impacts of the looming closure of the Strait of Hormuz by the Iran.
It is recalled that the parliament in Tehran has already given the green light and only final approval from the country's Supreme National Security Council is pending.
The international community is holding its breath as the developments in the conflict between Israel and Iran following the US involvement have brought to the fore the worst-case scenario, which is none other than the blockade of the Strait of Hormuz by Iran, notes Mr. Krokidis, explaining that approximately 20-25% of the world's oil is transported through Hormuz, making it a critical point for energy flows.
Any serious disruption there would have direct implications for global shipping and energy security. On average, over 3,000 tankers pass through the Strait of Hormuz each month, the majority of which are Greek-owned. According to data from Lloyd's List Intelligence / Seasearcher, in the first quarter of 2025, around 1,201 Greek-owned ships passed through the Strait of Hormuz.
A total of 271 ships are currently in the wider area of the danger zone. Of these, 199 ships are in the Persian Gulf and 72 in the Strait of Hormuz, i.e. in the most sensitive and potentially dangerous part of the region. A total of 50 ships out of the 271 are Greek-owned, a fact highlighted by the Hellenic Maritime Safety Authority, as it directly affects the legal status, protection obligations and the degree of intervention of the Greek state in the event of a potential incident. BIMCO's head of security, Jakob Larsen, stated that a full-scale conflict between Israel and Iran with US involvement would likely result in the effective closure of the straits. For the time being, however, the straits remain open and we want them to remain so.
Trade flows continue both east and west, but that could change very quickly. McGarry, director of Control Risks, said his firm assessed the risk of a complete shutdown as unlikely. If Iran did so, it would trigger an unwanted major reaction from the Gulf Arab states, whose trade would be seriously affected. The interruption of flows through the Strait of Hormuz, through which about 17-20 million barrels of oil and products pass per day, would cause global disruption, skyrocket prices and suffocate mainly Asian economies. Such a scenario, however extreme it may seem, cannot be completely ruled out, especially if Iran feels an existential threat.
At the shipping market level, changes in behavior are being recorded by shipping companies and charterers. Already, several shipowners are stating that they will be more cautious in loading cargoes from the Middle East, especially as the conflict deepens. According to shipbrokers, freight rates in the region are expected to increase further. Already, after 13/6, VLCC freight rates from the Persian Gulf to Asia increased by ~25% to $12.85/ton from $10.28. The daily rate for a VLCC chartered from the Gulf of China has increased from $20,000 last Thursday to over $50,000 after a week, reflecting the increased risk.
The oil market has seen significant volatility since the military conflict, with both sides unfortunately continuing attacks on civilians that began last week. Brent has risen as much as 11% since the start of trading on Monday, June 16, before settling today at around $78 a barrel, while West Texas Intermediate is near $76 a barrel. Middle Eastern producers transport about a fifth of the world’s daily output through the Strait and prices could rise further if Iran attempts to block them as customers around the world try to meet their own energy needs. Clarksons Research is seeing increased activity for VLCC tankers heading to safer loading areas, particularly in West Africa and the Gulf of Mexico. Spot fares for routes to Asia have already been strengthened, with some shipments being made via the Cape of Good Hope.
The container sector, in relation to the tanker sector, does not seem to be affected for the time being, as since the time when the Houthis imposed the peculiar regime in the Red Sea, container ships have chosen routes around the Cape of Good Hope, resulting in increased delivery times and increased costs. The insecurity in sea routes has raised concerns about the stability of global trade chains. It is worth noting that as long as the Strait of Hormuz remains open, local short sea connections to neighboring countries in the crisis area will not have a problem. However, it is obvious that if the strait is closed, the local container market will also be affected. Approximately 20-30 container ships pass through the Strait of Hormuz daily under normal conditions.
The developments are also expected to affect the marine insurance market, as ships sailing or attempting to sail in hot zones will now be subject to a 60% war risk surcharge, which will, as is well known, increase the transportation costs, which will ultimately be paid by the end consumer, either at the pump or on the shelf. The complete closure of the Strait of Hormuz, along with one-fifth of the world's daily oil consumption moving through it, remains an extreme scenario for quite obvious reasons. An attempted closure would provoke a dynamic response from the US, as well as from the Arab Gulf states.
