The Hormuz Flashpoint: US-Iran Tensions Threaten the World’s Most Critical Oil Artery
In February 2026, the US Department of Transportation issued an urgent advisory directing American-flagged vessels to avoid Iranian territorial waters when transiting the Strait of Hormuz. The warning arrived amid a sharp escalation in US-Iran tensions — the US military had just shot down an Iranian drone that approached the USS Abraham Lincoln carrier in the Arabian Sea, while both sides simultaneously engaged in nuclear negotiations in Oman. Jakob Larsen, chief safety and security officer at the international shipping association Bimco, was unequivocal in his assessment: Iran poses a “credible threat” to commercial shipping, and crucially, “there is no alternative route to the Strait of Hormuz.” Unlike the Red Sea, where vessels can reroute around the Cape of Good Hope, any disruption to Hormuz would create an entirely different category of crisis with no viable maritime detour.
The implications extend far beyond American-flagged vessels, which constitute only a small fraction of global commercial shipping. Alexander Perjessy, vice president and senior credit officer at Moody’s Ratings, characterized the Strait of Hormuz as one of the key transmission channels through which geopolitical tension affects credit fundamentals across the entire region. He described the risk as “always there” — a low-probability, high-impact scenario that the US advisory has now thrust back into the spotlight. The strait handles approximately 21% of global petroleum consumption daily, along with substantial LNG flows. If hostilities were to break out, non-US shipping companies — which operate the vast majority of vessels transiting Hormuz — could face security threats, sanctions exposure, or violent freight rate swings that would cascade through global energy supply chains.
Red Sea Reopening: Maersk’s Suez Transit Signals a New Era of Oversupply
In stark contrast to the Hormuz tensions, the Red Sea shipping corridor is gradually returning to normalcy. Maersk, one of the world’s largest container shipping companies, has completed two successful transits through the Suez Canal — its first since Houthi attacks forced a mass exodus of commercial vessels to the Cape of Good Hope route beginning in late 2023. The significance of this milestone cannot be overstated: it signals the potential end of over two years of Red Sea disruption that fundamentally reshaped global container shipping economics. However, the return to normalcy carries its own set of challenges, primarily the release of vast amounts of vessel capacity that had been absorbed by the longer Cape routing.
Bloomberg Intelligence analyst Kenneth Loh projects that a full return to Red Sea routing could cause global container shipping demand to contract by 1.1% in 2026 — not because trade volumes are declining, but because shorter voyages would free up capacity equivalent to hundreds of additional vessel deployments. This projection is set against a backdrop of unprecedented fleet expansion: global container ship capacity is expected to grow approximately 36% between 2023 and 2027, with record newbuild deliveries concentrated in 2025-2026. Bank of America analysts have described the situation as “structural overcapacity,” and freight rates are already reflecting this reality. The Drewry World Container Index fell to $2,107 per 40-foot container in late January, declining 4.7% in a single week as congestion eased and disruption-driven pricing began to unwind.
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