Commercial traffic through the Strait of Hormuz has fallen to its lowest level since the June truce, as renewed US-Iran hostilities and the collapse of diplomatic efforts reshape global energy markets.
Strait of Hormuz: ceasefire collapses as shipping grinds to a halt again
The situation in the Strait of Hormuz has deteriorated sharply after commercial traffic once again fell to a near standstill. With US sanctions tightening and military hostilities escalating, the latest developments are disrupting one of the world’s most strategic maritime corridors and forcing energy markets to reassess global supply routes.
Renewed military escalation halts commercial shipping
Commercial navigation through the Strait of Hormuz has slowed dramatically once again. The United States carried out a second consecutive day of strikes against Iran, while Iranian forces responded by attacking sites in Kuwait and Bahrain.
The latest exchange followed Iran’s direct assault on three commercial vessels attempting to transit the Strait. The renewed fighting came only hours after US President Donald Trump declared that the provisional ceasefire reached with Tehran in June was effectively “dead and buried.”
Washington also revoked the temporary waivers that had allowed limited Iranian oil exports under the provisional memorandum of understanding.
“Although revoking the waivers does not fundamentally alter oil market dynamics, it was significant from a broader market sentiment perspective,” ING analysts wrote in a research note. The decision had already fuelled expectations that the agreement was on the verge of collapse.
Shipping volumes fall to post-truce lows
According to Bloomberg, only a handful of vessels managed to navigate the Strait. Among the largest ships observed were a US-sanctioned supertanker and an Iranian-flagged container vessel.
On Wednesday, July 8, only 14 merchant ships reportedly crossed the Strait in both directions, the lowest daily volume recorded since the provisional agreement reached in mid-June.
These figures highlight a marked deterioration compared with recent weeks. Following the fragile US-Iran agreement to reopen the Strait of Hormuz, shipping activity had gradually resumed despite persistent maritime security risks.
Disputed interpretations of the Hormuz agreement
Although the provisional agreement initially helped restore traffic, it left major questions unresolved, particularly regarding transit rights and possible future charges.
The memorandum stated that Iran would “use its best efforts” to ensure the safe passage of commercial vessels for 60 days without imposing any fees.
According to Reuters, citing diplomatic sources, Iranian negotiators interpreted the wording as implicit US recognition of Tehran’s right to administer the Strait, even without collecting tolls during the initial two-month period while negotiating a broader agreement.
The United States and its Gulf allies, however, interpreted the text differently, arguing that it simply required Iran to facilitate safe navigation without imposing restrictions on international shipping.
For Tehran, Hormuz has overtaken the nuclear issue
For Tehran, securing US recognition of Iranian control over the Strait of Hormuz has become an even higher priority than negotiations over its nuclear programme, an issue the Iranian government continues to postpone.
Iran’s nuclear programme has dominated US-Iran relations for nearly 25 years, triggering extensive international sanctions and serving as the principal justification cited by the Trump administration for military action.
However, during negotiations over the provisional ceasefire, discussions on the nuclear dossier were pushed to later rounds, allowing Hormuz to become the immediate diplomatic priority.
Confidence in the Strait of Hormuz has collapsed
Writing in Foreign Policy, International Energy Agency Executive Director Fatih Birol argued that confidence in the Strait of Hormuz has effectively collapsed, adding that trust itself has become one of the world’s most valuable energy commodities.
According to Birol, geopolitical tensions are reshaping the global energy map in real time.
Middle Eastern producers have already begun searching for alternative export routes that bypass the Strait. The United Arab Emirates, for example, is accelerating construction of a second oil pipeline linking production facilities to the port of Fujairah, south of the Strait.
Other Gulf oil producers are evaluating additional measures to reduce dependence on Hormuz, including building strategic petroleum inventories directly in importing countries. Outside the Middle East, several energy exporters are also seeking greater access to alternative markets.
Investment shifts toward domestic energy sources
Since 2021, Birol noted, energy-importing countries have significantly redirected capital investment toward domestic energy production.
This trend is driving stronger demand for renewable energy, electric vehicles and battery technologies, while in some markets it is also supporting increased coal use.
The consequences of geopolitical instability extend well beyond oil and gas. Last year, China also leveraged its dominant position in rare earth supply as a geopolitical tool.
According to Birol, the global energy system is adapting to repeated crises, and the strategic role of the Strait of Hormuz will never be quite the same again. Tehran has demonstrated that maintaining a sufficient level of instability is enough to force traders and shipping companies to incorporate a permanent geopolitical risk premium into oil prices.
“Rather than simply choosing the lowest-cost supplier, companies and countries will increasingly apply geopolitical risk premiums to supplies moving through routes that once appeared secure. Price will increasingly be weighed against predictability,” Birol wrote.
The question now is how long Iran will consider continued pressure on the Strait of Hormuz to be in its strategic interest.
