Iran's bold move to disrupt oil and gas exports through the Strait of Hormuz has sent shockwaves through the global energy market. For four days, a combination of drone strikes and a climate of fear has effectively shut down commercial maritime traffic, despite intense US military action against Iran's naval forces.
At least four tankers have been targeted, and maritime traffic has plummeted by a staggering 80%, according to Lloyd's List Intelligence. The situation remains critical, with key insurers pulling their coverage, leaving ships vulnerable and hesitant to navigate the strait.
The tension escalated further when Brig Gen Ebrahim Jabbari, a senior advisor to Iran's revolutionary guards, issued a stark warning: "We will attack and set ablaze any ship attempting to cross."
But here's where it gets controversial: despite Iran's threats, the US Central Command (Centcom) claims to have crippled or sunk all 11 of Iran's naval ships operating in the Gulf of Oman. This includes the Shahid Bagheri, a converted container ship designed to carry and launch drones and helicopters, potentially extending Iran's military reach.
General Dan Caine, head of the US military, confirmed that the initial strikes involved Tomahawk cruise missiles targeting Iranian naval forces, accompanied by attacks on the southern flank of Iran. Satellite images revealed heavy damage to Iran's Bandar Abbas naval base.
While Israel focused on attacking Tehran and politically significant regime sites, the US military's strategy has been to secure the south of Iran, controlling maritime routes and airspace.
The US military also reported no signs of Iran attempting to mine the shipping lanes with its small submarine fleet, though details remain scarce. Centcom claims to have targeted the Iranian submarine fleet at Bandar Abbas.
Despite these assurances, tankers carrying oil, natural gas, and other fossil fuel products are hesitant to risk the transit out of the Gulf. Some are considering turning off their tracking transponders and attempting night-time transits, even without insurance coverage.
Conventionally, the Strait of Hormuz is a critical chokepoint, with around a fifth of the world's crude oil passing through it. However, this figure varies significantly by region and country. While the Americas import 12.5% of their oil via the strait, China's reliance is much higher at 45.7%, according to Kpler's data.
Iran's strategy has shifted towards bombing infrastructure and ships at port, with seemingly more successful results. Satellite imagery revealed damage to Saudi Arabia's Ras Tanura oil refinery, the country's largest, which was forced to shut down after two drones were intercepted and caused a fire.
Qatar's state-run energy firm halted liquefied natural gas production due to military attacks, and a fire broke out in Fujairah, UAE, after a drone was intercepted in the port area.
The consequences are clear: oil and gas prices have skyrocketed, with Brent crude reaching $83 a barrel, a 15% increase from Friday's levels. Donald Trump is now considering proposals for the US government to assist oil tankers in obtaining insurance, aiming to restore confidence in the region after the war initiated by the US and Israel.
