Global maritime assets worth about $22 billion stuck in Persian Gulf as Iran shuts Strait of Hormuz

Maritime assets, including tanker ships from shipping companies across the world, worth around $22 billion are stuck in the Persian Gulf as Iran has shut the strait of Hormuz earlier today amid the ongoing conflict with the U.S. and Israel.  

"Hundreds of ships are blocked in the Persian Gulf. Some of them are also loaded with crude oil. Vessels worth $22 billion are estimated to be stuck in the region," said an industry source who did not wish to be named.  

The source pointed out that the overall value at stake, including the freight loaded on the ships, which is largely crude oil in this case, may be even higher. It may be noted that ever since the U.S. led attack began on Iran on Saturday, four tankers have reportedly been damaged, and two seafarers have lost their lives.  

Iran has already announced the closure of the Strait of Hormuz and warned that it would open fire on any vessel attempting to pass through the strategic waterway, according to reports citing Iranian state media. The move marks Tehran’s strongest escalation yet, following signals over the weekend that it intended to block the critical oil export corridor in retaliation for recent military strikes. 

The strait of Hormuz accounts for about 20% of the global crude oil supply and is a critical source for China and India. 

Meanwhile, the move and the attack itself come as a major jolt for the sea freight sector. That said, even the war insurance cover stands withdrawn. Even before the war began, insurers had withdrawn the war coverage and had categorized Middle East as high-risk zone. 

Global fleet operators, meanwhile, are in risk mitigation mode. MSC has stopped all bookings for worldwide cargo destined for the Middle East, according to industry sources.  

Maersk has suspended all vessel movement through the Gulf of Hormuz and the Suez Canal. CMA CGM has also suspended all Suez Canal operations.  

On the impact on the Indian companies on the closure of the strait of Hormuz, India Ratings said in a note, “If the Strait of Hormuz were to close for an extended period, it could lead to increased costs for fuel, freight, and insurance, longer transit times, and affect the margins and working capital of Indian corporations involved in international trade.”