A Disruption Still in Full Force
There is a persistent temptation, especially among officials eager to project confidence, to read the first trickle of returning traffic as a sign that a crisis has passed. When energy authorities point to shipping in the Strait of Hormuz "rising very meaningfully" and predict continued expansion, the claim deserves scrutiny against the actual data on the water. The reality is far less reassuring: traffic through the passage remains deeply depressed, nowhere near pre-war levels.
The most telling detail is not how many ships are coming out, but how few are going back in. Vessels are trickling out of the Persian Gulf, yet they are not returning to load again — a one-directional flow that reveals just how broken the system remains. Roughly 116 major tankers are still trapped inside the Persian Gulf, and only about a quarter of them have managed to escape. A handful of liquefied natural gas carriers have emerged from Qatar, but those are single-digit numbers against a backdrop of paralysis. The disruption that took hold around late February has not eased.
Competing Blockades and a Contested Strait
What makes this episode so structurally dangerous is the emergence of two competing, mutually hostile regimes governing the same narrow waterway. On one side, Iran has asserted control through a newly created Persian Gulf Strait Authority, channeling ships through its territorial waters and charging tolls. On the other, the United States has imposed its own blockade of Iranian ports across the Persian Gulf, the Strait of Hormuz, and the Gulf of Oman — and has sanctioned the Iranian authority outright. Any company that pays a toll to transit the Iranian side now risks falling under sanctions itself.
This leaves shippers caught between incompatible demands. The United States has been working clandestinely to route ships out through the Omani side, the southernmost part of the channel, but the maneuvering room is limited. Compounding the danger, there has now been the first visual confirmation of mines being laid in the Strait of Hormuz — a tangible, physical threat layered atop the legal and political ones.
The Tyranny of Distance
When a chokepoint closes, the instinctive policy response is to find oil elsewhere. The United States has tried exactly that, ramping up exports and drawing tankers toward American shores to load. Exports are running at roughly 4 million barrels a day, with an effort underway to push that toward 6 million. But there is a hard ceiling that no amount of policy can wish away: geography.
The problem is pure distance. A voyage from Ras Tanura to the east coast of China takes about 22 days. The same journey from the U.S. Gulf Coast to China takes roughly 55 days. Even when additional barrels appear on the market, the world simply does not have enough tanker tonnage to absorb the dramatic lengthening of every voyage. Replacing Gulf oil with American oil is not a one-for-one swap; it ties up far more ships for far longer, and that tonnage does not exist on demand.
The Rise of the Shadow Fleet
Behind the official statistics, companies are navigating risk in ways that further erode the integrity of global shipping. The "dark fleet" — a parallel, shadow fleet of vessels with questionable registries — has proliferated. These ships were first used to move oil from Venezuela and Iran, but they expanded enormously to carry Russian crude after 2022. They operate outside the bounds of normal international law, often loading sanctioned oil, sailing to anchorages, and transferring cargo to other tankers in order to mask its true origin.
The response has been increasingly forceful. The United States recently conducted a boarding operation in the Indian Ocean and has attacked vessels attempting to run the blockade. The crackdown is not confined to the waters off Iran: French forces recently took down a Russian tanker out in the Atlantic. This is enforcement spilling across oceans, and it signals that the old norms governing who may sail where, and under what flag, are being rewritten in real time.
A Structural Threat to the Freedom of the Seas
The deepest consequence is not measured in barrels or shipping rates but in the erosion of a principle that has underpinned global prosperity for generations. Since the Second World War, one of the greatest benefits to the entire planet has been the explosion of trade, made possible by treating the oceans as a great commons through which goods can move freely. Even at the height of the Cold War, cargo flowed around the world. That assumption is now being challenged.
The creation of a parallel shadow fleet operating outside the rules is one symptom. Another is the renewed threat of direct attacks on shipping. The Houthis in Yemen have announced they will once again target vessels connected to Israel. History suggests how this escalates: in 2023 and early 2024, what began as targeting Israeli-owned and Israeli-flagged ships morphed into attacks on vessels belonging to countries that merely dealt with Israel or counted as its allies.
Should the Houthis resume attacks on ships leaving the Red Sea, the ripple effects would be severe. It could jeopardize the roughly 4.5 million barrels a day the Saudis move through their pipeline to Yanbu. It could disrupt the overland container routes supplying the Gulf states — Kuwait, Bahrain, Qatar, and Oman. And it could force a massive diversion of shipping through the Suez Canal and around Africa. Taken together, this represents one of the gravest challenges to the freedom of the seas since the Suez Canal was closed for eight years beginning in 1968.
Why Peace Alone Won't Reset the System
Here lies the insight that markets and investors are most prone to underestimate: even a full diplomatic resolution would not return conditions to where they stood before. Imagine the relevant leaders declaring the conflict over and proclaiming peace in the Middle East. The structural damage would remain. The same leaders would still hold power, and the potential for conflict to reignite the following week would persist. That standing risk is itself a permanent tax on commerce.
More importantly, the damage is not merely short- and medium-term — it is long-term, and it reaches well beyond crude oil. Entire industries depend on the affected commodities: fertilizer, ammonia, sulfur, and a vast range of other goods. The precedent is instructive. When the Houthis interdicted trade in the Red Sea at the start of 2024, traffic still has not recovered to pre-disruption levels — and that crisis at least offered an escape valve in the form of a diversion around Africa.
The Persian Gulf offers no such alternative. There is no way to sail around it. There are some pipelines, but ultimately ships have to get back into the Gulf, because roughly 11% of all global trade — not just oil, but all trade — passes through it. And even if the waterway were reopened tomorrow, resetting the flow would take months, if not years. Reentry will be more expensive because of elevated insurance risk, and the region may not see its former volume of trade return until genuine, long-term stability takes hold.
Conclusion
The lesson is that chokepoints do not simply switch back on. A ceasefire can stop the shooting, but it cannot instantly restore confidence, re-price insurance, untangle competing blockades, clear mines, or conjure the tanker tonnage that distance demands. The freedom of the seas — the quiet, taken-for-granted foundation of modern global trade — has proven far more fragile than its decades of stability suggested. Rebuilding trust in it will be the work of years, not the stroke of a peace agreement.