The cost of oil is rising amid IRGC statements about the likely closure of the Strait of Hormuz, which poses a threat to maritime transportation.

• The closed Strait of Hormuz is located at the heart of the world’s energy flows, so any disruption to its operation entails a violation of transit passage and freedom of navigation under international maritime law.

The closed Strait of Hormuz is located at the heart of the world’s energy flows, so any disruption to its operation entails a violation of transit passage and freedom of navigation under international maritime law.

Threats of attacks on commercial vessels pose significant legal and economic risks to public and private actors. Previous instances of Iran’s detention of commercial vessels have been considered non-compliance with international law, undermining freedom of navigation, as reported by USNI News. Even without an official blockade, real threats can complicate traffic, provoke naval escorts and increase the likelihood of errors.

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S&P Global Commodity Insights estimates that the near-term impact will be operational rather than a total shutdown, with shipowners and charterers changing routes, rescheduling voyages and increasing vigilance. Insurance companies are reviewing their exposure to war risks as underwriters adjust assessments and contingencies for passage. According to Jacob Larsen, head of security at BIMCO, commercial risk managers perceive the threats as significant and in some cases choose to bypass the strait altogether. Any prolonged uncertainty leads to increased price gaps (spreads), extended voyage times and reduced available tonnage.

Regarding pricing, diplomatic sources warn that a complete shutdown could cut exports by five million barrels daily and push the price of oil to between $200 and $300 a barrel, according to Iraq’s foreign ministry. These figures are scenario calculations, not projections, and depend on the duration of the situation, the availability of alternative routes and the political steps taken.

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