How might Iran’s assertion that it will dictate the end of the conflict with the U.S. and Israel reshape strategic calculations of major oil‑producing nations and alter global maritime insurance premiums in the Strait of Hormuz?
Iran's Islamic Revolutionary Guard Corps has declared that "it is we who will determine the end of the war" and that "the equations and future status of the region are now in the hands of our armed forces"Iran's Revolutionary Guards say they 'will determine end of war' - TRTtrtworld +1. This assertion, combined with Tehran's threat that it will not allow "one litre of oil" to be exported from the Gulf if strikes continueIran's Revolutionary Guards say they 'will determine end of war' - TRTtrtworld +1, has triggered a fundamental recalculation across every dimension of the global energy system—from the maritime insurance architecture that underpins seaborne trade to the strategic positioning of major oil-producing nations and the emergency responses of consuming economies.
The maritime insurance market has undergone its most severe dislocation since the 1987-88 Tanker War, with the speed and magnitude of premium increases exceeding historical precedentsActuarial Warfare: How Seven Insurance Letters Closed the World’s Most Critical Chokepoint and Why Markets Are Mispricing Duration by 300%substack +1. War risk premiums for vessels transiting the Persian Gulf have surged from approximately 0.25% of hull value to 1% within days—a fourfold increase that translates into extraordinary cost escalation for commercial shippingWar Risk Insurance Returns to Strait of Hormuz — at a Price - Caixin Globalcaixinglobal +1.
For a Very Large Crude Carrier (VLCC) valued at $100 million, the war risk premium for a single voyage from the Persian Gulf has risen from approximately $250,000 to between $2 million and $3 million—roughly ten times the pre-conflict costWar Risk Insurance Returns to Strait of Hormuz — at a Price - Caixin Globalcaixinglobal . Ships with perceived American, British, or Israeli connections now pay three times more than other tonnage for Middle East war risk cover, with additional outlays running to millions of dollars per trip for more valuable vesselsUS, UK and Israeli ships charged three times more than others for Middle East war cover :: Lloyd's Listlloydslist .
The Joint War Committee, comprising syndicate members from the Lloyd's Market Association and representatives from the London insurance company market, expanded the high-risk area designation to include waters around Bahrain, Djibouti, Kuwait, Oman, and QatarGulf War Risk Insurance Zone Expanded by Lloyd's | gCaptaingcaptain . This expansion was designed to close gaps where war-risk insurance had not previously applied, leaving ships exposed without adequate coverGulf War Risk Insurance Zone Expanded by Lloyd's | gCaptaingcaptain .
Major mutual marine insurers including Norway's Gard and Skuld, the UK's NorthStandard, the London P&I Club, and the New York-based American Club announced cancellation of war risk cover for ships operating in the region, effective March 5Maritime insurers cancel war risk cover in Gulf as Iran conflict disrupts shipping | Shipping industry | The Guardiantheguardian . By March 2, leading maritime insurers including the International Group of P&I Clubs had issued notices to terminate war risk cover for vessels in the Persian Gulf and Strait of Hormuz, with approximately 200 tankers left stranded in the Gulf as owners refused to risk uninsured assetsTrump using Iran invasion as chance to bring Shipping Insurance market from London to USA ?youtube .
A critical vulnerability has emerged in the form of pollution liability coverage. The US Development Finance Corporation's $20 billion reinsurance facility explicitly covers only hull, machinery, and cargo—with no mention of essential pollution coverageOne big reason ships and insurers are unwilling to risk Strait of Hormuz - CNBCcnbc . JPMorgan energy analysts estimate that roughly 329 vessels operating in the Persian Gulf would require oil pollution, salvage, hull, and third-party liability insurance, implying approximately $352 billion of maximum insurance coverage that private markets are not currently providing What to know about the agency Trump says will insure ships in the Persian Gulf - CBS Newscbsnews .
The pollution risk is considered "unknowable or uninsurable"—similar to the terrorism risk the US faced after 9/11—because the region lacks the sophisticated oil cleanup industry and technology available in the United States, and insurers do not have data to calculate business disruption claims should a massive oil spill contaminate destination beachesOne big reason ships and insurers are unwilling to risk Strait of Hormuz - CNBCcnbc . Without this coverage, tanker operators face catastrophic liability exposure that may prevent shipping resumption regardless of hull and cargo insurance availability.
Morningstar DBRS has warned that reinsurers are likely to respond by raising attachment points or reducing capacity, increasing retention for primary carriersReinsurers likely to raise prices & reduce capacity in the Gulf amid Iran conflict: Morningstar DBRS - Reinsurance Newsreinsurancene . If a large vessel were attacked and destroyed, insured losses could surpass $200–$300 million, including hull, cargo, and liability claimsReinsurers likely to raise prices & reduce capacity in the Gulf amid Iran conflict: Morningstar DBRS - Reinsurance Newsreinsurancene . The concentration risk in narrow corridors such as the Strait of Hormuz, alongside the risk of simultaneous losses across multiple lines—marine, property, aviation, and political violence—increases underwriting volatility significantlyReinsurers likely to raise prices & reduce capacity in the Gulf amid Iran conflict: Morningstar DBRS - Reinsurance Newsreinsurancene .
President Trump directed the US International Development Finance Corporation to provide political risk insurance at "a very reasonable price" for all maritime trade transiting the Gulf, effectively creating a federal backstop for a region deemed too volatile by private insurersTrump orders political risk insurance backstop for energy security in Persian Gulf - Reinsurance Newsreinsurancene +1.
The DFC announced on March 6 that its reinsurance facility would insure losses up to approximately $20 billion on a rolling basis, applying only to vessels meeting specified criteria, with coverage focusing initially on hull, machinery, and cargoDFC Announces $20B Plan for Maritime Reinsurance in the Gulf | DFCdfc . The facility would operate through "preferred American insurance partners" in coordination with US Central CommandDFC Announces $20B Plan for Maritime Reinsurance in the Gulf | DFCdfc .
Lloyd's of London indicated willingness to work with the White House on a joint public-private venture to provide cover for shipping in the regionLloyd's Stands Ready to Work With U.S. on Insurance for Hormuz Transitsmaritime-executive . Lloyd's Market Association CEO Sheila Cameron noted that approximately 1,000 vessels remain in the Persian and Arabian Gulf with aggregate hull value exceeding $25 billion, approximately half being oil and gas tankers, and that most are insured on the London market with cover currently remaining in placeLloyd's in Talks With U.S. Over Gulf Shipping Insurance Plan - ESG Newsesgnews .
However, critics have argued this represents "a shell game" that uses government guarantees to create a false sense of security for commercial shippers, with the DFC's $100 billion portfolio potentially exposed to payouts reaching "hundreds of millions, if not billions, of dollars per vessel"Trump’s Hormuz Escort Order is a Desperate, Deadly Gambit That Will Sink Americanaturalnews .
Saudi Arabia has executed the most significant strategic pivot among Gulf producers, leveraging its unique infrastructure advantages while demonstrating both defensive resilience and market power.
The kingdom has activated its 1,200-kilometer East-West Pipeline (Petroline) at maximum capacity, capable of transporting up to 5 million barrels of crude oil per day from eastern fields to the port of Yanbu on the Red SeaWhat is the Strait of Hormuz and why does it matter?bbc +1. Shipments from Red Sea terminals have surged to approximately 2.3 million barrels per day—about 50% more than any month since late 2016Oil market chaos to deepen as more Gulf giants cut output | Fortunefortune —though this remains far below the 6 million barrels per day the kingdom has exported from the Persian Gulf in recent monthsOil market chaos to deepen as more Gulf giants cut output | Fortunefortune .
Saudi Aramco has informed buyers that Arab Light crude cargoes would need to be loaded at Yanbu, adjusting shipping operations to prioritize safety and service continuitySaudi East-West Pipeline Underpins Kingdom’s Energy Security Strategyaawsat . Eight supertankers have already been filled at Red Sea facilities, setting shipments on track for record volumesUS-Iran War: Aramco Shares Surge As Iran War Drives Global Oil Prices Higher | WIONyoutube .
Aramco raised the official selling price of its flagship Arab Light crude for April deliveries to Asian buyers by $2.50 per barrel—the largest increase since August 2022—compared to a pre-war forecast of 80 centsSaudi Arabia Hikes Asian Oil Prices as Iran War Roils Market - Bloombergbloomberg . This aggressive pricing move signals confidence in demand for Saudi barrels and the kingdom's irreplaceable role as a reliable supplier during crisis conditions.
Despite infrastructure advantages, Saudi Arabia has been forced to shut several offshore fields—including Safaniya, Marjan, Zuluf, and Abu Safa—in response to security threats from Iranian missile and drone attacks, curtailing an estimated 2–2.5 million barrels per dayHormuz halt forces Opec+ producers to curb crude output | Latest Market Newsargusmedia . The Ras Tanura oil refinery, the kingdom's largest, was temporarily closed after sustaining damage from a drone attackOil and gas production shutdowns in Iraq and Kuwait widen the Iran war's impact on energy prices | Fortunefortune +1.
Saudi Arabia has positioned oil in strategic locations far from Iranian attack range, filling reserves in the Red Sea, the Netherlands, and South AfricaStrait of Hormuz Global Oil, Gas Trade Disrupt Amid Iran War | TIMEtime . The kingdom's foreign exchange reserves exceeding $450 billion provide capacity to pay premium prices for food imports, charter dedicated shipping, and if necessary, airlift critical commoditiesSaudi Arabia Food Security Crisis and Iran War Impacthouseofsaud .
The GCC has activated its collective defense framework with unprecedented urgency, declaring that the security of each member state is "indivisible" and that any attack against one constitutes a direct attack against all under its founding charter and joint defense agreementGCC closes ranks after unprecedented Iranian attacks | | AW - The Arab Weeklythearabweekly .
The GCC Ministerial Council declared that member states "retain their legal right to respond under Article 51 of the United Nations Charter, which guarantees the right of self-defence, individually or collectively, in the event of aggression"GCC closes ranks after unprecedented Iranian attacks | | AW - The Arab Weeklythearabweekly . The council stated members would "take all necessary measures to defend their security and stability and to protect their territories, citizens and residents, including the option to respond to the aggression"GCC closes ranks after unprecedented Iranian attacks | | AW - The Arab Weeklythearabweekly .
An extraordinary GCC-EU ministerial meeting convened on March 5, bringing together foreign ministers to discuss implications of Iranian attacks and coordinate responsesJoint statement by GCC-EU Ministers’ meeting on recent developments in the Middle East: Iran’s attacks against GCC states - Middle East, North Africa and the Gulfeuropa . The ministers strongly condemned the Iranian attacks as threatening regional and global security, reaffirmed the importance of safeguarding regional airspace and maritime routes including the Strait of Hormuz and Bab el-Mandeb, and recognized the importance of EU maritime defensive operations ASPIDES and ATALANTAJoint statement by GCC-EU Ministers’ meeting on recent developments in the Middle East: Iran’s attacks against GCC states - Middle East, North Africa and the Gulfeuropa .
As Kuwaiti political scientist Bader Al Saif has argued, only collective action among GCC states is likely to resolve their strategic dilemma—it is easier for Iran to cajole, and the United States to dismiss, individual Gulf statesThe Gulf Monarchies Are Caught Between Iran’s Desperation and the U.S.’s Recklessness | Carnegie Endowment for International Peacecarnegieendowment . Security coordination across the bloc can pool interceptor stockpiles to defend against Iranian attacks, while diplomatic coordination seeks negotiated off-rampsThe Gulf Monarchies Are Caught Between Iran’s Desperation and the U.S.’s Recklessness | Carnegie Endowment for International Peacecarnegieendowment .
Kuwait Petroleum Corporation declared force majeure and began cutting production from its February level of approximately 2.6 million barrels per day, citing "ongoing aggression by the Islamic Republic of Iran" and threats against safe passage through the Strait of HormuzKuwait confirms reports of oil production cutsyahoo +1. As OPEC's fifth-largest producer with 100% of exports transiting HormuzOil and gas production shutdowns in Iraq and Kuwait widen the Iran war's impact on energy prices | Fortunefortune , Kuwait lacks bypass pipeline infrastructure and faces the starkest storage constraints.
Iraq, OPEC's second-largest producer, has experienced the most severe production curtailment. Key southern oil fields are now producing only 1.3–1.8 million barrels per day, down from approximately 4.3 million barrels per day pre-conflict—a decline of 60–70%Oil market chaos to deepen as more Gulf giants cut output | Fortunefortune +1. With 97% of exports normally transiting HormuzOil and gas production shutdowns in Iraq and Kuwait widen the Iran war's impact on energy prices | Fortunefortune , Iraq's strategic options are severely constrained, though it retains some Mediterranean export capacity via pipeline.
QatarEnergy halted liquefied natural gas production at Ras Laffan Industrial City—the world's largest LNG export facility representing approximately 20% of global LNG supply—after Iranian drone attacksGas prices soar as QatarEnergy halts LNG production after Iran attacks | Energy News | Al Jazeeraaljazeera +1. Qatar's Energy Minister Saad al-Kaabi warned that oil prices could reach $150 per barrel within two to three weeks if the Strait remains closed, and predicted all Gulf exporters would need to declare force majeure "in the next few days"Kuwait Shuts Production, Qatar Warns Oil Could Hit $150 in Weeks | OilPrice.comoilprice .
Even if the conflict ended immediately, Qatar would likely need "weeks to months" to return to a normal schedule of energy deliveriesKuwait Shuts Production, Qatar Warns Oil Could Hit $150 in Weeks | OilPrice.comoilprice . QatarEnergy also stopped making downstream products including urea, polymers, and methanol, widening the industrial impact beyond LNGQatar's LNG Production Halt Sparks European Gas Price Surge Amid Gulf Tensionsgulfnews .
The UAE has adopted a multifaceted response combining defensive military operations, diplomatic positioning, and consideration of economic countermeasures. UAE air defenses have destroyed 221 of 238 ballistic missiles detected and intercepted 1,342 of 1,422 Iranian drones since the conflict beganAny defensive measures by UAE against Iran will be made 'public and clear', says senior official | The Nationalthenationalnews .
The UAE is actively considering freezing billions of dollars in Iranian assets held within its territory—a potential economic countermeasure that could severely disrupt Tehran's access to foreign currency and global trade networksUAE Mulls Freezing Iranian Assets: WSJ Reports Potential Billions Freeze as Iran-U.S.-Israel War Escalatesibtimes . Emirati authorities have privately warned Iranian officials that such steps are under serious reviewUAE Mulls Freezing Iranian Assets: WSJ Reports Potential Billions Freeze as Iran-U.S.-Israel War Escalatesibtimes .
The UAE operates the 1.8 million barrel per day Habshan-Fujairah pipeline bypassing HormuzWhat’s at stake for oil markets as Trump strikes Iranyahoo +1, providing some export flexibility, though port attacks have caused intermittent disruptionsHormuz Closure: 16 Mbd Oil Disruption Markets Haven't Priced Middle East conflict - oil market implications: a continuing assessment | Kpler - Mar 05, 2026kpler . With only 66% of exports normally transiting Hormuz compared to 100% for Kuwait, Qatar, and IranOil and gas production shutdowns in Iraq and Kuwait widen the Iran war's impact on energy prices | Fortunefortune , the UAE retains marginally greater strategic flexibility.
UAE Minister of State for International Cooperation Reem Al Hashimy emphasized that the UAE does not "seek to expand the circle of confrontation" and called for a return to the negotiating table as "the only rational way forward"UAE urges US, Israel and Iran to return to the negotiating table | Euronewseuronews .
The oil futures market structure reveals how traders are pricing expectations about conflict duration and supply normalization.
The spread between the first two Brent forward contracts stands at $4.50 per barrel, while the difference between the nearest expiring contract and the one-year forward contract exceeds $15 per barrelOil turmoil widens Brent-WTI gap, drives diesel, jet fuel cracks — TradingView Newstradingview . This steep backwardation—where spot prices exceed futures prices—signals tight near-term supply and acute supply anxietyOil Futures: Could Crude Breach $100 as the Iran Conflict Escalates? - IG UKig . The price premiums for immediate deliveries have not been higher since spring and summer 2022 following Russia's invasion of UkraineOil turmoil widens Brent-WTI gap, drives diesel, jet fuel cracks — TradingView Newstradingview .
Commodity strategist Carley Garner estimates that stripping out the Iran conflict, crude would be trading significantly lower—potentially in the $40s per barrelCommodity Strategist: Oil Would Be in the $40s Without Iran War247wallst . WTI hit a 12-month low of $55.44 on December 16, 2025, before rallying sharply as tensions escalatedCommodity Strategist: Oil Would Be in the $40s Without Iran War247wallst . The United States Oil Fund has gained 30.42% year-to-date through March 3, 2026Commodity Strategist: Oil Would Be in the $40s Without Iran War247wallst .
Brent crude surged to nearly $119 per barrel—a 3.75-year nearest-futures high—before falling backCrude Oil WTI Mar '26 Futures Price - Barchart.combarchart . The benchmark has traded in a volatile range around $80-110, reflecting uncertainty about conflict durationOil Futures: Could Crude Breach $100 as the Iran Conflict Escalates? - IG UKig +1. Before the escalation, the US Energy Information Administration had projected Brent would average about $58 per barrel in 2026 and $53 in 2027Bitcoin gets liquidity lifeline as US injects $3 billion into banking system amid oil price spikecryptoslate .
VLCC freight rates have shattered records, compounding the insurance premium burden to create unprecedented total shipping costs.
The benchmark freight rate for VLCCs shipping 2 million barrels from the Middle East to China hit an all-time high of $423,736 per day on March 3—an increase of more than 94% from the previous FridayIran: Oil supertanker rates soar as insurers drop war risk protectioncnbc . South Korea's Sinokor was asking the equivalent of approximately $20 per barrel to transport oil from the region to China, compared with an average of about $2.50 in 2025Oil Shipping Costs Soar as Iran Conflict Chokes Hormuz - Bloombergbloomberg .
The TD3C route (270,000 metric tons Middle East Gulf to China) was assessed at WS473.33, corresponding to a daily round-trip time charter equivalent of $485,959Tanker Shipping Rates Post Strong Gains on Middle East Worries | Hellenic Shipping News Worldwidehellenicshippingnews . Pre-conflict, VLCCs normally chartered for rates in the low-to-mid five digits per dayVLCC Rates Hit New Sky-High Record: $424,000 Per Daymaritime-executive .
Vessel traffic through the Strait of Hormuz crashed from an average of 138 ships per day to just five crossings by March 4Kuwait Shuts Production, Qatar Warns Oil Could Hit $150 in Weeks | OilPrice.comoilprice +1. Approximately 30 VLCCs remain anchored in the Persian Gulf as floating storageHormuz Closure: 16 Mbd Oil Disruption Markets Haven't Priced Middle East conflict - oil market implications: a continuing assessment | Kpler - Mar 05, 2026kpler . Major carriers including Maersk, MSC, CMA CGM, Hapag-Lloyd, and COSCO have restricted or halted bookings through the regionIran Crisis: Strait of Hormuz Closure and Commercial Shipping Riskcastorvali .
China, India, Japan, and South Korea collectively receive 69% of all crude oil and condensate flows through the Strait of Hormuz Amid regional conflict, the Strait of Hormuz remains critical oil chokepoint - U.S. Energy Information Administration (EIA) eia +1. Their factories, transport networks, and power grids depend on uninterrupted Gulf energyIran-US tensions: What would blocking Strait of Hormuz mean for oil, LNG?aljazeera .
China has announced it will send special envoy Zhai Jun to the Middle East to conduct mediation effortsChina to send Middle East special envoy to work for ...news +1. Foreign Minister Wang Yi has engaged counterparts in Oman, France, Saudi Arabia, and the UAE, with Beijing positioning itself as a neutral broker capable of constructing off-rampsIran conflict and China: How it is unsettling Beijing and its ambitions bbc +1.
China's LNG inventories stood at 7.6 million tons as of late February, providing short-term coverStrait of Hormuz closure: which countries will be hit the most - CNBCcnbc . Approximately 40% of China's oil imports pass through HormuzStrait of Hormuz closure: which countries will be hit the most - CNBCcnbc . China has increased unloading volumes of Russian crude to 1.5 million barrels per day as an alternative sourceRussian Oil Tracker – January 2026: Russia’s oil export structure shifts as Rosneft and Lukoil lose dominance - Kyiv School of Economicskse .
India faces the largest combined exposure among major importers. More than half of its LNG imports are Gulf-linked, and a significant share is Brent-indexed, creating a "dual physical and financial shock"Strait of Hormuz closure: which countries will be hit the most - CNBCcnbc . Approximately 60% of India's oil imports and 60% of its LNG supplies transit the Strait of HormuzIran-US tensions: What would blocking Strait of Hormuz mean for oil, LNG?aljazeera +1.
India currently holds strategic petroleum reserves covering only approximately 25 days of demandGlobal oil supply chains face historic stress: Crude prices and tanker rates now at all-time highs — here’s the key reason behind the oil price surgeindiatimes +1. Russia has reportedly offered to support India's energy requirements, though this places New Delhi in a delicate balancing act given Western pressure to reduce Russian oil importsUS-Iran War: India's Oil Imports Face Strain After Closure of Hormuz | WIONyoutube .
Japan holds emergency oil reserves equivalent to approximately 254 days of domestic consumptionSouth Korea's fuel price cap in response to oil price surging - CNBCcnbc . The government has instructed a national oil reserve storage site to prepare to release crude stocks, though timing remains unclearSouth Korea's fuel price cap in response to oil price surging - CNBCcnbc . Japan imports approximately 90% of its oil from the Middle East, with roughly 70% transiting the Strait of HormuzAsia Intelligence Brief for Monday, March 9, 2026 | The Rio Timesriotimesonline .
South Korea is in talks with refiners about measures including tapping strategic petroleum reserves (approximately 120 days' worth in government reserves) and possibly imposing a ban on oil product exportsS Korea considers SPR release, oil product export ban | Latest Market Newsargusmedia . The country is reviewing implementation of maximum petroleum price designation under emergency legislationKorea Gas Prices Surge 9 Times Faster Than Japan Amid Oil Shocksedaily . South Korea sources approximately 60% of its crude via the Strait of HormuzIran-US tensions: What would blocking Strait of Hormuz mean for oil, LNG?aljazeera .
European gas prices surged as much as 54% following Qatar's production haltGas Prices Surge as Qatar Shuts World’s Largest LNG Export Plant - Bloombergbloomberg . The Dutch TTF natural gas benchmark rose approximately 40-50% in a single sessionGas Storage Europe — Emergency Update, 3 March 2026 : r/energyreddit . Goldman Sachs raised its forecast for April 2026 European gas prices to €55 per megawatt-hour from €36Qatar's LNG Production Halt Sparks European Gas Price Surge Amid Gulf Tensionsgulfnews .
European Union gas storage stands below 30% capacity, compared with about 40% at the same point the previous yearQatar's LNG Production Halt Sparks European Gas Price Surge Amid Gulf Tensionsgulfnews . Germany's storage was 20.5% full and France's stood at 21%Qatar's LNG Production Halt Sparks European Gas Price Surge Amid Gulf Tensionsgulfnews . Belgium faces particular difficulty with storage at around 25.5%—below the EU average—while also having 8% reliance on Qatari LNGWhich EU countries are most exposed to the LNG supply disruption? | Euronewseuronews .
Italy and Belgium face the greatest pressure due to heavier reliance on Qatari supplies—Qatar accounted for approximately 30% of Italy's LNG importsWhich EU countries are most exposed to the LNG supply disruption? | Euronewseuronews . Poland, with 17% of gas imports from Qatar, also faces significant challengeWhich EU countries are most exposed to the LNG supply disruption? | Euronewseuronews .
The European Commission convened emergency coordination groups and stated that US LNG deliveries—now making up most imports—along with Norwegian pipeline gas, are keeping supplies stable for the time beingWhich EU countries are most exposed to the LNG supply disruption? | Euronewseuronews . Options under discussion include coordinated demand-reduction targets, accelerated joint LNG purchasing programs, temporary price safeguards, and financial support mechanismsWhich EU countries are most exposed to the LNG supply disruption? | Euronewseuronews .
Wood Mackenzie analysis indicates the disruption threatens to raise long-term structural challenges for global gas and LNG markets similar to those following Russia's 2022 invasion of Ukraine, with approximately 200 million metric tons per annum of forecast Asian LNG demand growth potentially disrupted over the next decadeHow the Middle East conflict is reshaping gas and LNG marketsglobenewswire .
The IEA's 32 member countries collectively hold at least 1.2 billion barrels of emergency oilStrategic Petroleum Reserve: Can Tapping Oil Stockpiles Tame Iran Price Shock? - Bloombergbloomberg . A coordinated release of 400 million barrels was announced—the largest in history, representing nearly 30% of the IEA's total stockpile🚨 OIL PRICES CRASH 11%! 📉 G7 & IEA Release 400M Barrels from Reserves! 🛢 Historic Global Responseyoutube .
However, the US Strategic Petroleum Reserve currently holds only about 415 million barrels—approximately half its 700-million-barrel capacity—following record drawdowns during the Ukraine crisisUSA Has No Immediate Plan to Tap Oil Reserverigzone . A "full-on crisis" in the Strait of Hormuz could outstrip emergency supplies held by IEA membersUSA Has No Immediate Plan to Tap Oil Reserverigzone .
The crisis has been compounded by the resumption of Houthi attacks in the Red Sea. Houthi-controlled Yemen announced on February 28 that it would resume attacks on Israel and commercial ships in the Red Sea, forcing Suez Canal traffic to be rerouted around Africa's Cape of Good Hope2026 Strait of Hormuz crisis - Wikipediawikipedia . This eliminates the primary alternative route for vessels seeking to bypass Hormuz.
Gemini partners Maersk and Hapag-Lloyd announced rerouting of selected services from the Trans-Suez route to the Cape of Good HopeIran attacks prompt Red Sea rethink as box shipping exits Strait of Hormuz :: Lloyd's Listlloydslist . The Gulf of Oman, Strait of Hormuz, Persian Gulf, and Red Sea shipping lanes are becoming "commercially unviable for the conflict's duration, requiring route diversions that add 10–14 days transit time"Iran Crisis: Strait of Hormuz Closure and Commercial Shipping Riskcastorvali .
Oman has maintained a distinct diplomatic posture, publicly expressing dismay that negotiations showing signs of progress had been undermined, and urging Washington "not to get sucked in further"War in the Middle East: What implications for the EU and the world?europa . Foreign Minister Badr al-Busaidi, who mediated pre-war US-Iran talks, said diplomatic options and "off ramps" remain "available"Oman renews push for diplomacy, says ‘off-ramps available’ in Iran war | News | Al Jazeeraaljazeera . Notably, Oman has been subject to significantly fewer Iranian strikes than its regional peersIran's president says mediation underway: Update | Latest Market Newsargusmedia .
Qatar had invested years in mediation, serving as the indispensable interlocutor between Hamas and Israel, and between Iran and the United StatesIran’s strikes on the Gulf: Burning the bridges of good neighbourlinessaljazeera . The Foreign Ministry spokesperson described Iran's strike on Oman as "an attack on the very principle of mediation"Oman renews push for diplomacy, says ‘off-ramps available’ in Iran war | News | Al Jazeeraaljazeera . Qatar has said Iran's strikes against it had "already crossed every possible red line" and reserves the right to retaliateIran's president says mediation underway: Update | Latest Market Newsargusmedia .
Iranian Foreign Minister Abbas Araghchi has stated that "talking or negotiating with the US is no longer on the agenda," citing attacks during previous negotiation roundsIran says no future negotiations with US after ‘bitter experience’ | US-Israel war on Iran | Al Jazeeraaljazeera . However, Iranian intelligence quietly reached out indirectly to the CIA through a third country with an offer to discuss terms for ending the conflictIran reached out to CIA for terms to end war with Israel | The Jerusalem Postjpost +1. US officials described the approach as "not serious for now"Iran reached out to CIA for terms to end war with Israel | The Jerusalem Postjpost .
Iran's President Masoud Pezeshkian acknowledged on March 7 that "some countries have begun mediation efforts," though without naming anyIran's president says mediation underway: Update | Latest Market Newsargusmedia .
The current crisis draws explicit comparisons to the 1987-88 Tanker War, when Operation Earnest Will escorted reflagged Kuwaiti tankers through the Gulf using 30 warships over 14 monthsActuarial Warfare: How Seven Insurance Letters Closed the World’s Most Critical Chokepoint and Why Markets Are Mispricing Duration by 300%substack +2. Between 1984 and 1988, more than 400 merchant vessels from over 30 nations were attacked or damaged400 Ships Attacked: The Forgotten Tanker War of The 1980s.youtube .
In October 1987, London underwriters increased insurance rates 50% for cargoes in the Persian Gulf following Iranian missile attacks, raising premiums to 0.75% of cargo value from 0.50%Insurance rates were increased 50% for cargoes... - LATimes.comlatimes . Strategic measures to reduce risk, such as re-flagging tankers, had a slow impact on rates, with normalization occurring only throughout 1988 as attacks declinedStrait of Hormuz - Insurance Market - The Strauss Centerstrausscenter .
The current crisis differs critically in that US forces are simultaneously waging war against Iran while attempting to guarantee safe passage—a dual mission unprecedented in the historical recordTrump wants Navy escorts for tankers in the Gulf. Why it may not workcnbc .
Iran's assertion that it will "determine the end of the war" forces every major oil-producing nation to calculate across multiple dimensions simultaneously:
For Saudi Arabia: The kingdom must balance maximizing the strategic premium on its uniquely reliable supply against the risk of permanent market share loss if the crisis extends and buyers permanently diversify. The $2.50/barrel price increase signals confidence, but infrastructure attacks create operational uncertainty even for the most resilient producer.
For Kuwait, Iraq, and Qatar: Without bypass infrastructure, these producers face an existential choice between accepting indefinite force majeure conditions or seeking accommodation with Iran that might compromise their security relationships with Washington.
For the UAE: Abu Dhabi must weigh its Abraham Accords commitments and economic integration with Israel against the demonstrated willingness of Iran to inflict devastating costs on its infrastructure and tourism-dependent economy.
For OPEC+ collectively: The bloc's decision to increase quotas by 206,000 barrels per day appears largely symbolic when logistics and transit risk matter more than production targetsOPEC+ Boosts Oil Output Sharply Amid Iran War Escalation - The Moscow Timesthemoscowtimes . The physical reality—that roughly one-fifth of global oil supply passes through Hormuz—means markets are more concerned with whether barrels can move than with spare capacity on paperMarch, 2026 - Africa’s premier report on the oil, gas and energy landscape. - Africa’s premier report on the oil, gas and energy landscape.africaoilgasreport .
The maritime insurance market has become the critical transmission mechanism for Iran's strategic leverage. By rendering the Strait of Hormuz commercially unviable, Tehran has effectively weaponized the insurance architecture that underpins global trade—forcing every stakeholder from Lloyd's syndicates to Asian refiners to the US Treasury to recalculate their positions in real time. The resolution of this crisis will depend not merely on military outcomes but on whether a functioning insurance regime can be reconstructed under conditions of ongoing conflict—a challenge without clear historical precedent.