Trump’s Plan To Restore Shipping In The Strait Of Hormuz May Be Too Late To Prevent An Energy Crisis
Efforts by U.S. President Donald Trump to restart shipping through the Strait of Hormuz may come too late to prevent major disruptions to the global energy system.
The administration’s proposal—combining financial guarantees for shipping companies with possible U.S. naval escorts—would require a massive international coordination effort. Even if it succeeds, analysts warn the measures may only partially reduce the growing economic shock triggered by the recent closure of the crucial oil and gas corridor.
A Vital Energy Artery Suddenly Disrupted
The Strait of Hormuz is one of the world’s most strategically important shipping routes. The narrow passage between Iran and Oman normally carries roughly one-fifth of global oil and natural gas supplies.
Traffic through the strait effectively halted over the weekend after the United States and Israel launched large-scale airstrikes against Iran. In response, Tehran retaliated with attacks on nearby countries and energy facilities.
The escalation quickly spread beyond Iran itself. Strikes damaged infrastructure across the region, including key energy installations in neighboring states.
Among the immediate consequences:
- Qatar’s liquefied natural gas production was shut down
- Saudi Arabia’s largest oil refinery was forced to halt operations
- Several oil tankers were attacked near the Strait of Hormuz
The heightened risks led many shipping insurers and vessel operators to suspend transit through the Gulf entirely.
Oil Prices and Markets React Immediately
The sudden disruption triggered immediate turmoil in global energy markets.
Oil prices surged as traders anticipated severe supply shortages. Brent crude briefly rose above $84 per barrel, its highest level since mid-2024.
Stock markets also reacted sharply. Asian markets were particularly affected because many countries in the region depend heavily on Middle Eastern energy supplies.
Investors fear that prolonged disruption in the Gulf could produce a global economic shock similar to previous oil crises.
Trump Announces Emergency Measures
In an attempt to stabilize the situation, President Trump announced several measures on Tuesday designed to encourage shipping companies to resume operations.
The plan includes:
- Political risk insurance for maritime trade through the Gulf
- Financial guarantees for shipping companies
- Possible U.S. Navy escorts for vessels traveling through the Strait of Hormuz
Trump said he had directed the U.S. International Development Finance Corporation to provide the financial backing needed to reassure tanker operators and insurers.
The idea is to reduce the financial risks associated with transporting oil through a war zone.
Skyrocketing Shipping Costs
However, the financial measures may not be enough to convince companies to return.
Shipping costs have exploded since the conflict began.
The cost of chartering a large crude carrier capable of transporting 2 million barrels of oil from the Gulf to Asia has surged to roughly $30 million per voyage.
That price represents:
- Around 5% of the value of the cargo
- Nearly five times higher than rates at the start of the year
Such costs reflect both the physical dangers of sailing through the region and the insurance premiums required to cover potential losses.
Safety Fears Remain the Biggest Obstacle
Even with U.S. naval escorts, shipping companies remain concerned about security risks.
Iran possesses a wide range of asymmetric naval weapons that could threaten tankers moving through the narrow strait. These include:
- Attack drones
- Anti-ship missiles
- Fast attack boats capable of swarm tactics
While naval escorts could reduce the risk of attack, they cannot eliminate it entirely.
For many shipping companies, the danger to crews and vessels remains too high.
Historical Comparison: The 1980s Tanker War
The United States has faced similar challenges before.
During the “Tanker War” phase of the Iran–Iraq conflict in the late 1980s, Washington launched Operation Earnest Will, escorting Kuwaiti oil tankers through the Gulf to deter Iranian attacks.
However, today’s situation is far more complex.
Global energy trade through the region has expanded dramatically over the past four decades.
Energy Exports Are Much Larger Today
Oil and gas exports from the Gulf now total roughly 20 million barrels per day, nearly double the levels seen during the 1980s conflict.
Natural gas shipments have grown even more dramatically.
Qatar, now the world’s second-largest producer of liquefied natural gas (LNG), exported approximately 80 million metric tons of LNG last year, representing about 20% of global demand.
During the 1980s tanker conflict, Qatar was barely a participant in global energy markets.
Protecting such massive volumes of energy shipments today would require a far larger military effort than in the past.
A Massive Naval Operation May Be Required
Securing the flow of oil and gas through the Strait of Hormuz would likely require not only U.S. naval forces but also assistance from allied fleets.
Organizing such a multinational operation would take time.
Military analysts say it could require days or even weeks to coordinate escort missions, patrol routes, and protection systems for commercial shipping.
Unfortunately, the global energy system may not have that much time.
Producers Are Already Cutting Output
The blockade has already forced several oil-producing countries in the Gulf to reduce production because they cannot ship their oil.
Iraq cut production by 1.1 million barrels per day, roughly 25% of its total output, due to a shortage of storage capacity.
Officials warned production could fall by more than 3 million barrels per day if exports remain blocked.
Saudi Arabia Facing Storage Limits
Saudi Arabia, the world’s largest crude exporter, faces similar challenges.
The kingdom exported about 7 million barrels per day in February, much of which normally passes through Hormuz.
To avoid the blocked strait, Saudi Arabia has begun diverting some oil through a pipeline to the Red Sea port of Yanbu.
However, that pipeline has a capacity of 5 million barrels per day, and the port itself can export no more than about 2 million barrels per day.
As a result, large quantities of oil are now being stored on land.
Saudi Arabia already holds approximately 82 million barrels in storage, representing 56% of its total capacity.
If exports remain blocked, storage facilities could fill quickly.
Other Gulf Producers Facing Similar Constraints
The United Arab Emirates also has a pipeline that bypasses the Strait of Hormuz.
That pipeline can move 1.5 million barrels per day to export terminals outside the Gulf.
But the UAE faces the same storage challenges as its neighbors.
Current storage levels are already about 40% full, holding around 34 million barrels of crude oil.
If the situation continues, several Gulf producers—including Saudi Arabia, the UAE, and Kuwait—may be forced to cut production even further.
Asian Economies Hit the Hardest
The biggest impact may fall on Asian economies, which depend heavily on Middle Eastern oil and gas.
Refineries in Asia are already scrambling to find replacement supplies.
Several Chinese refineries have begun reducing processing rates due to uncertainty about future deliveries.
In India, shortages have forced authorities to cut gas supplies to certain industrial sectors.
The shock is spreading through financial markets as well.
South Korea’s KOSPI stock index has dropped 18% this week, partly due to fears that energy shortages could disrupt the country’s petrochemical and manufacturing industries.
The Clock Is Ticking
Ultimately, the success of Trump’s strategy may depend on how long the war lasts.
The president has suggested that the conflict could continue for several weeks.
However, the global energy system may not be able to endure a prolonged closure of the Strait of Hormuz.
Even if the U.S. plan eventually restores shipping through the strait, analysts warn that time may already be running out to prevent a major global energy shock.
