What Happened
- Global shipping remained far from normal following the US-Iran ceasefire, with multiple structural and legal hurdles preventing rapid restoration of Hormuz traffic.
- Key obstacles: IRGC requirement for vessel coordination before transit; proposed transit fees from Iran and Oman; ambiguity in ceasefire terms; elevated war risk insurance premiums; and hundreds of ships queuing in Gulf of Oman.
- Bulk carriers (dry cargo) began tentatively transiting; oil tankers and LNG carriers were more cautious due to higher commercial stakes and insurance requirements.
- Global freight rates remained elevated; the Red Sea disruption (Houthi attacks since late 2023) continued in parallel, compounding the shipping crisis.
- Shipping companies and traders called for formal diplomatic clarity — a written, unambiguous, time-bound transit protocol — before committing vessels to Gulf transits.
Static Topic Bridges
Global Shipping Industry: Structure and Regulation
The global shipping industry carries approximately 90% of world trade by volume. It is governed by: the International Maritime Organization (IMO) — a UN specialised agency responsible for maritime safety and pollution prevention; flag state regulations (the law of the country under whose flag a vessel sails); and port state control. Key international maritime conventions include: SOLAS (Safety of Life at Sea, 1974), MARPOL (Marine Pollution, 1973/78), and STCW (Standards of Training, Certification and Watchkeeping, 1978).
- IMO established: March 17, 1958 (entered into force); HQ London
- IMO membership: 175+ member states
- SOLAS: IMO Convention on ship safety; amended regularly
- MARPOL: prevents pollution from ships (oil, noxious substances, garbage, air pollution)
- Flags of convenience: ships registered in countries with low regulatory burdens (Liberia, Panama, Marshall Islands are largest ship registries)
- World trade: ~90% by volume carried by sea
Connection to this news: The return to normal shipping will require not just a political ceasefire but operational certainty — insurance coverage, formal transit protocols, and coordination mechanisms acceptable to the IMO and shipping companies.
War Risk Insurance and its Impact on Shipping
War risk insurance covers ships and cargo for losses caused by war-related perils (mines, torpedoes, missile attacks). It is typically purchased separately from hull and cargo insurance and is provided through specialist markets like Lloyd's of London. When war risk areas are declared, premiums spike dramatically — making voyages commercially unviable or forcing higher freight rates. During the 2023–2024 Red Sea crisis (Houthi attacks), war risk premiums increased dramatically for Red Sea routes, diverting hundreds of ships around the Cape of Good Hope.
- War risk insurance: underwritten by Lloyd's of London and specialist markets
- Joint War Committee (JWC): Lloyd's committee that designates high-risk areas
- Strait of Hormuz and Persian Gulf: classified as a high-risk area since 2019
- Red Sea crisis (Houthi, 2023–24): ~85% of Red Sea container traffic diverted via Cape
- Cape of Good Hope diversion: adds ~10–14 days and significant extra fuel costs per voyage
Connection to this news: Even after the ceasefire, the persistence of war risk insurance requirements — at elevated premiums — is one of the key structural hurdles preventing immediate normalisation of Hormuz shipping.
Houthi Attacks and the Dual Chokepoint Crisis
The Red Sea disruption (Houthi missile and drone attacks on commercial vessels since November 2023, in response to the Gaza war) had already significantly impacted global trade before the Iran-US war began. Combined with the Strait of Hormuz closure from February 2026, the global shipping industry faced a simultaneous blockage of two of the world's most critical maritime chokepoints.
- Houthi attacks on Red Sea shipping: began November 2023; intensified early 2024
- Red Sea cargo diversion: ~80–85% of container traffic diverted via Cape of Good Hope
- Bab-el-Mandeb Strait (Red Sea exit): disrupted since late 2023
- Operation Prosperity Guardian: US-led multinational naval operation to protect Red Sea shipping (launched December 2023)
- Combined impact: both Persian Gulf (Hormuz) and Red Sea (Bab-el-Mandeb) chokepoints simultaneously disrupted in 2026
Connection to this news: The Hormuz truce does not automatically resolve the Houthi Red Sea threat; shippers must assess both corridors before normalising routes, meaning full global shipping recovery requires resolution of two separate crises.
Key Facts & Data
- Global trade carried by sea: ~90% by volume
- IMO established: March 17, 1958
- Red Sea Houthi attacks: began November 2023
- Red Sea traffic diverted via Cape: ~85%
- Cape diversion: adds ~10–14 extra days per voyage
- Hormuz shipping post-ceasefire: >90% below normal
- Ships queued in Gulf of Oman: ~300–500 (estimated April 2026)
- War risk insurance: elevated; key barrier to commercial resumption