Uncertainty over navigation through the Hormuz Strait is pushing oil prices higher and reshaping global energy dynamics.
Uncertainty over whether the Hormuz Strait is open
Oil prices are climbing again toward 100 dollars per barrel after a sharp drop earlier this week, triggered by the announcement of a fragile ceasefire between the United States and Iran. This partial rebound highlights persistent uncertainty around whether the Hormuz Strait is truly open. Shipping companies remain unconvinced about the safety of the passage and unclear on whether Iran will impose conditions.
“It must be said clearly: the Hormuz Strait is not open. Passage is subject to permits, conditions, and political leverage. This is not freedom of navigation, it is coercion,” said Sultan Ahmed Al Jaber, head of the UAE’s state oil company ADNOC. Gulf energy producers strongly oppose any agreement involving payments to Iran. According to Gulf monarchies, conditional transit violates the United Nations Convention on the Law of the Sea, which guarantees freedom of navigation through natural waterways.
Iran’s demands and control over transit
Tehran is seeking control over the passage and, according to the Wall Street Journal, is considering introducing a tariff system for ships. Among the proposals is conditioning transit on payments in cryptocurrencies or Chinese renminbi. For a supertanker carrying around 2 million barrels, the toll could reach 2 million dollars, including security escort and administrative costs.
US Secretary of State Marco Rubio has called the Iranian demand illegal, while also stating that the United States will not intervene to stop it. In recent days, Donald Trump suggested that the US could form a joint venture with Iran to manage toll collection and share revenues.
At present, most shipping companies prefer to remain idle. Until there are clear guarantees that Iran will not target vessels, insurance and operational risks are considered too high to resume normal transit. “For them, the Hormuz Strait has become as important as missiles and the nuclear program,” Danny Citrinowicz, former head of the Iran desk in Israeli military intelligence, told the Wall Street Journal. “Control has become imperative.”
Traffic remains at historic lows
According to Arab mediators, ships authorized to transit must coordinate with the Islamic Revolutionary Guard Corps, the powerful paramilitary group designated as a terrorist organization by both the United States and the European Union.
Despite the ceasefire announcement, traffic through the strait remains at historic lows. On Wednesday, April 8, only four vessels were authorized to pass, compared to more than 100 ships per day before the conflict.
For energy-importing regions, including parts of Sub-Saharan Africa that rely heavily on global oil flows, disruptions in Hormuz can translate into higher fuel costs and increased economic pressure.
Oil price disconnect masks the scale of the shock
Futures prices remain significantly below the cost of physical shipments, which are becoming increasingly scarce. This disconnect fails to reflect the severity of the recent energy shock, which may take considerable time to absorb. A clear example is Dated Brent, considered the benchmark for physical oil purchased by refiners, which reached a record 144 dollars per barrel this week.
Meanwhile, Brent futures, after peaking at nearly 120 dollars last month, are now trading around 95 dollars, despite the ongoing blockade and production cuts of nearly 10 million barrels per day by Middle Eastern producers.
Analyst Vandana Hari sees this as a market failure. “In the long term, a broken futures market risks becoming the exclusive playground of speculators, a hub of insider trading, but useless for hedging physical barrels,” she wrote on X.
A structural shift in the global oil market
As Axios notes, there is no single explanation for why futures remain relatively low compared to physical prices. The scale of the disruption is unprecedented, leaving markets struggling to interpret it. Some believe the system is too large to fail, while others anticipate demand destruction that could drive prices down sharply. Another key uncertainty is the influence of political signals, particularly from Donald Trump, where even a single social media post can trigger major price swings.
The energy shock linked to the conflict with Iran could lead to a lasting transformation in how global oil markets operate. According to Axios, this may turn a relatively open and fluid system into one that is fragmented and increasingly politicized. Such a shift could result in higher energy prices and inflation, with long-term implications for the global economy, including potential challenges to the dominance of the US dollar.
Dan Yergin, vice chairman of S&P Global, described the situation as “the mother of all supply chain disruptions.”
