Tensions in the Strait of Hormuz have reached a critical juncture, with Iran’s Islamic Revolutionary Guard Corps (IRGC) Navy live-fire exercise triggering widespread disruptions to port operations and maritime shipping. As the U.S.-Iran military standoff intensifies—exacerbated by the deployment of a U.S. aircraft carrier—key ports in the Persian Gulf and Gulf of Oman face delays, congestion, and soaring insurance costs. For global supply chains reliant on this strategic waterway (through which 20% of the world’s oil passes), the instability poses significant risks to trade flow and cost predictability. This analysis breaks down the impact on critical ports, shipping dynamics, and implications for businesses worldwide.
Iran’s Military Exercise: The Catalyst for Disruption
From February 1 to 2, 2026, Iran’s IRGC conducted a large-scale live-fire naval exercise in the Strait of Hormuz, establishing a 5-nautical-mile no-sail zone for drills. The exercise, coupled with escalating U.S.-Iran tensions, has created a climate of uncertainty that rippled through regional maritime operations. While the exercise is nearing conclusion as of February 2, its residual effects—including port backlogs and heightened risk perceptions—are expected to linger, with no immediate resolution to the underlying geopolitical disputes. Turkey’s urgent mediation efforts have so far failed to bridge U.S.-Iran differences, keeping the region on edge.
Critical Ports Hit Hard: Delays, Congestion, and Throughput Drops
Key ports surrounding the Strait of Hormuz have borne the brunt of the disruption, with varying degrees of operational impact:
Iran’s Ports: Severe Disruptions to Core Trade Hubs
• Bandar Abbas Port: Iran’s largest comprehensive port—handling 85% of the country’s maritime trade—has experienced vessel berthing delays exceeding three days. Temporary throughput has plummeted by over 40%, as container ships, bulk carriers, and oil tankers are forced to wait at anchor or divert. For businesses relying on Bandar Abbas for imports of raw materials or exports of goods, the delays threaten production schedules and customer commitments.
• Qeshm Island Port: A major commercial hub in the Persian Gulf, Qeshm Island has seen multiple container ships and oil tankers held in anchorage, unable to access berths due to exercise-related restrictions and safety concerns. The backlog is growing, with no clear timeline for a return to normal operations.
UAE Ports: Diversions and Congestion Mount
• Jebel Ali Port: The Middle East’s busiest container port has faced increased vessel diversions, as ships avoid the Strait of Hormuz or seek alternative berths to bypass delays. This has led to congestion, surging cargo storage demands, and longer turnaround times for vessels that do call. For global logistics providers, Jebel Ali’s disruption ripples through supply chains, affecting shipments to Europe, Asia, and Africa.
• Fujairah Port: A critical oil export and bunkering hub, Fujairah has seen some oil tankers opt to skip calls entirely, fearing transit risks in the strait. The port is also grappling with increased congestion as vessels reroute from more affected areas, straining its handling capacity.
Energy Ports in Saudi Arabia and Oman: Efficiency Declines and Cost Spikes
• Saudi Arabia’s Ras Tanura Port: The world’s largest oil export terminal has experienced reduced operational efficiency due to heightened transit risks. While the port remains operational, vessels are moving more cautiously, leading to longer loading times and potential delays in crude oil shipments.
• Oman’s Sohar Port: A key gateway for energy and industrial goods, Sohar has seen a decline in throughput as shipping companies adjust routes to avoid the Strait of Hormuz. The port’s energy-related operations—including oil and gas shipments—have been particularly affected, with businesses facing higher costs and longer lead times.
Shipping Industry Impact: Rising Insurance Costs and Route Diversions
The Strait of Hormuz crisis has sent shockwaves through the global shipping industry, with two key consequences:
• Soaring War Risk Insurance Premiums: War risk insurance for vessels transiting the Strait of Hormuz has spiked sharply, as insurers price in the heightened geopolitical risk. For shipping companies, this adds significant costs to each voyage—costs that may ultimately be passed on to manufacturers, retailers, and consumers.
• Route Diversions and Longer Transit Times: Some shipping lines are choosing to divert vessels around the Arabian Peninsula, via the Cape of Good Hope, to avoid the Strait of Hormuz. While this reduces exposure to conflict risk, it adds thousands of nautical miles to voyages, increasing fuel costs and extending transit times by 2–3 weeks. For time-sensitive goods—such as perishables or critical industrial components—these delays could disrupt production and inventory management.
Supply Chain Implications for Global Businesses
The disruption in the Strait of Hormuz has far-reaching implications for businesses worldwide, particularly those reliant on Middle Eastern energy or trade:
• Energy Price Volatility: The strait’s role as a major oil transit route means any disruption threatens global energy supplies. Businesses dependent on crude oil, gasoline, or diesel—including manufacturing, transportation, and logistics sectors—may face higher fuel costs and supply uncertainties.
• Delayed Shipments and Inventory Risks: For companies importing or exporting goods through Middle Eastern ports, delays and diversions could lead to inventory shortages or excesses. This is particularly challenging for just-in-time (JIT) manufacturing systems, which rely on predictable shipping schedules.
• Increased Logistics Costs: Higher insurance premiums, longer transit times, and port congestion are driving up logistics costs. Businesses may need to renegotiate contracts with shipping providers or adjust pricing strategies to absorb these additional expenses.
Strategic Recommendations for Mitigating Risks
To navigate the ongoing crisis in the Strait of Hormuz, businesses should consider the following strategies:
• Diversify Supply Chains: Reduce reliance on Middle Eastern ports or routes through the Strait of Hormuz by exploring alternative suppliers, ports, and shipping lanes. For example, European businesses could source energy from the North Sea or North America, while Asian companies might prioritize routes via the Suez Canal (where safe) or Cape of Good Hope.
• Monitor Geopolitical Developments: Stay updated on U.S.-Iran tensions, military activities, and port operational statuses through reliable sources (e.g., national maritime authorities, shipping industry associations). Proactive monitoring allows for timely adjustments to shipping plans.
• Negotiate Flexible Contracts: Work with shipping providers and suppliers to include flexibility clauses in contracts—such as allowances for delays, route changes, or cost adjustments— to mitigate financial risks.
• Optimize Inventory Levels: For critical goods, consider increasing safety stock to buffer against potential delays. This balances the cost of holding inventory with the risk of stockouts.
Conclusion: Uncertainty Persists as Geopolitical Tensions Linger
The escalation of confrontation in the Strait of Hormuz has underscored the vulnerability of global supply chains to geopolitical risk. While Iran’s military exercise is winding down, the underlying U.S.-Iran tensions and the deployment of U.S. naval assets mean uncertainty will persist for weeks, if not months. Key ports in the region face ongoing disruptions, and shipping companies are grappling with higher costs and longer transit times. For businesses worldwide, the crisis serves as a reminder to build resilience into supply chains—through diversification, flexibility, and proactive risk management. As the situation evolves, staying agile and informed will be critical to minimizing the impact on operations, costs, and customer satisfaction.
