The outbreak of war involving Iran and the escalating tensions across the Gulf are already sending shockwaves through global trade and maritime transport. With the Strait of Hormuz — one of the world’s most critical energy chokepoints — partially disrupted, concerns are mounting over the stability of energy markets, shipping routes, and global supply chains.
To assess the potential implications for tanker markets, energy flows, and maritime logistics, GeoTrends spoke with Dr. Stavros Karamperidis, Associate Professor of Maritime Economics, Plymouth Business School, and Head of the Maritime Transport Research Group, for an early analysis of how the conflict could reshape shipping dynamics in the weeks ahead.
– Tensions in the Gulf are escalating day by day. How vulnerable is commercial shipping through the Strait of Hormuz, and what would be the immediate economic consequences for tanker and LNG markets?
That is not the $1 million question, as the expression goes, but the $1 trillion one: how big is the impact going to be? At the moment, I do not think anyone can say with certainty, but it is clear that the effects will be significant. If we look at freight rates, for instance, charter rates for a VLCC were around $50,000 per day back in September, whereas just a few days ago they surged to about $425,000, nearly a tenfold increase.
This reaction is understandable, as there is considerable uncertainty regarding insurance coverage. Many insurance providers worldwide have indicated that they may suspend coverage for vessels operating in the region starting immediately.
– Are there already discussions about protective measures to keep shipping routes operational?
Yes, and this is where governments and the maritime sector are trying to intervene. The United States has indicated it may step in. President Trump stated that insurance for vessels operating in the area could be covered through an American provider, while also suggesting the creation of naval convoys and similar protective measures aimed at stabilising the situation.
If such measures are implemented, the situation may resemble what we observed a few months ago in the Red Sea near the Strait of Bab el-Mandeb, when Houthi attacks targeted commercial vessels. In other words, while tensions may escalate on the military front, efforts are simultaneously being made within the supply chain and maritime logistics sectors to maintain the flow of trade.
No one wants to see the Strait of Hormuz closed. Around 21 million barrels of oil pass through it every day, representing roughly 30% of global oil trade and a similar share of LNG shipments, as well as more than half a million TEU in containerised cargo. More than 3,000 vessels could potentially be affected or trapped in the region, so the potential knock-on effects on global supply chains and the energy market could be substantial.
– Have you already started to observe signs of this market shock?
Yes, we have already seen oil prices rising. Oil prices have increased by about 20%, and LNG prices have also surged. The question, however, is: surged compared to what?
If we compare the current situation with what happened when Russia invaded Ukraine, it is actually just a blip. As you may remember, LNG prices at that time rose to around $600. Now we are talking about increases from roughly $40 to $80 or $90, so in comparison it is not dramatically high.
However, over the past year LNG prices had stabilised at around $50. When you suddenly see prices doubling, it inevitably starts to unsettle the market.
– Could rising energy prices once again feed broader inflationary pressures?
Of course. Globally, we are already dealing with energy inflation and food inflation. The last thing anyone wants to see is prices rising again because, as we highlighted in one of our publications, the moment energy prices increase, they tend to push inflation up across almost all other products.
This is why there is strong interest in keeping oil prices low, as well as keeping charter prices under control for tankers and other vessels.
– What about the impact on shipping costs themselves?
If we see something similar to what happened during COVID, the impact could be significant. For example, in the container shipping market, transporting a container from Asia to Europe used to cost about $1,000. During the pandemic, as you may remember, that figure rose to $4,000–$5,000 depending on the circumstances.
Now we also have war risk premiums, which means higher insurance costs for vessels operating in the region. A lot of additional costs are starting to accumulate, and they are increasing very quickly. We are only a few days into the conflict and we are already seeing some prices doubling and, in some cases, increasing tenfold. If no action is taken, this could have major knock-on effects.
That is why the recent statement by President Trump was seen as a step in the right direction: the United States would escort vessels entering and leaving the Strait of Hormuz, providing protection and helping ensure that maritime trade continues to flow.
– Is there a risk of capacity constraints in the war risk insurance market if hostilities persist?
At the moment, there are around 100,000 vessels operating globally. Naturally, there is a high concentration of Very Large Crude Carriers (VLCCs) in the region, for obvious reasons. When crude cargo needs to be transported, it is typically carried by VLCCs.
I do not think this will become a major issue in terms of capacity constraints, so we are unlikely to see stockouts anytime soon. Fortunately, global reserves are currently quite full.
However, everything ultimately depends on how long the situation lasts. If it is resolved within one or two weeks, we will hopefully avoid major problems. But if it continues for five, six, or even seven weeks, as President Trump suggested, then supply pressures could start to emerge, because eventually stockouts may occur. It is as simple as that.
– What ripple effects might a prolonged disruption in the Gulf have on other key maritime corridors?
A serious disruption in the Gulf could indeed create secondary congestion or instability in other key maritime corridors, such as the Suez Canal and the Red Sea.
To be frank, the Red Sea has not yet returned to normal. If you have been following developments, you will know that only a limited number of container vessels are currently transiting the area. Most ships are still rerouting around the Cape of Good Hope. That remains one of the major issues: normal traffic levels have not yet been restored in the Red Sea, which adds another layer of difficulty.
If you look at maritime risk monitoring maps, you will see that we previously had a high-risk zone in the Red Sea. Now the Gulf and the Strait of Hormuz have also been added to that category.
As a result, a very large portion of global maritime routes is suddenly classified as a war or high-risk zone. This inevitably makes the movement of goods between Asia and Europe, in both directions, far more complicated.
– If exports from Iran and neighbouring producers were partially disrupted, which alternative trade routes or regions would gain strategic importance?
In reality, we need to look at this sector by sector, especially when it comes to energy products, because the situation is quite different for container shipping. In the container sector, the Gulf region essentially acts as a bridge between Europe and Asia. That is why, as I mentioned earlier, there are currently around half a million containers on roughly 200 container vessels in the region, carrying goods from Asia to Europe.
In principle, those vessels could be diverted and rerouted elsewhere, so this would not necessarily create a major global disruption. However, it would be a significant problem for the region itself, because if container ships stop delivering goods there, stockouts could appear quite quickly.
– Does the picture change when we look at energy flows rather than container shipping?
Yes, the situation is very different when we talk about energy products such as oil and gas. Around 30% of global supply comes from that region, so removing or disrupting such a share would obviously have significant knock-on effects.
At the same time, we need to consider which parts of the world would be most affected. For example, the European Union and the UK source less than 10% of their energy supplies from that region. Since we are also moving into the summer period, when energy consumption typically declines slightly, that 10% shortfall could potentially be managed.
– Which regions would be most vulnerable if the disruption were to persist?
Asia is a completely different case. Around 70% of Asia’s energy supply comes from that region, which means the impact there could be much more significant. At first glance, one might assume this does not directly affect Europe. However, we live in a globalised economy, and Asia — particularly China — is the world’s main manufacturing hub. If China were to face energy shortages, that would inevitably create major knock-on effects across global supply chains.
That said, such impacts would likely take a few weeks to become visible, as the process unfolds gradually. China currently holds large oil reserves, which means its industry and economy could continue operating for several weeks. If the worst-case scenario persists and China, along with other Asian countries, fails to secure alternative energy supplies — something I hope they will manage to do — then the situation could become more serious.
As I mentioned earlier, we are also moving toward the summer period, when energy demand tends to be lower, and we are still talking about several weeks into the future. Ideally, the situation will not last that long. But if it does, we might start seeing energy shortages affecting factories, forcing them to reduce production capacity, which would then ripple through global manufacturing and supply chains.
– Should we expect freight rate volatility similar to previous Gulf crises, or has the structure of today’s tanker market changed the way it responds?
Up until September–October 2025, just a few months ago, charter rates were around $50,000 per day. As we can already see, those rates have now skyrocketed. So yes, we are definitely going to witness this kind of market reaction and a high degree of volatility.
If we look back at the COVID period, we observed something very similar, largely due to the imbalance between demand and supply. You also have to take into account that many vessels are currently stuck in the region, which effectively reduces the available supply of ships.
At the same time, demand is increasing because there is a degree of panic in the market and everyone is trying to secure oil shipments. In other words, demand for oil transportation is rising while the supply of vessels is constrained, since many ships have been trapped in the region. Under these conditions, the sharp increase in freight rates is a logical reaction of the market.
– From a maritime economics perspective, do geopolitical shocks of this kind ultimately strengthen or weaken the resilience of globalised trade networks?
I would say that, thankfully, we have already experienced a major shock with COVID. That was the real stress test for global supply chains and for how systems respond during a crisis.
Fortunately, over the past few years, particularly after COVID, a large number of new vessels were ordered, and many of them have already started being delivered to the market. For that reason, I am hoping we will see de-escalation quite soon. If that does not happen, there should still be sufficient capacity in the market to accommodate demand.
I would say, “thankfully,” we already experienced a major shock with COVID. That was the real shock in terms of global supply chains and how things evolve during a crisis.
Fortunately, over the last couple of years, especially after COVID, there were many new vessel orders, and those vessels have started being delivered to the market. So, I am hoping we will see de-escalation quite soon. If that does not happen, then hopefully there will still be enough capacity in the market to accommodate demand.
– How much does market psychology influence the way supply chains react in moments of uncertainty?
Quite significantly. In economics, psychology often plays a major role. For example, you might see people rushing to refuel their cars even when they do not actually need to. Normally, someone might fill up once or twice a month, but as soon as they hear alarming news, they immediately think: “I should refuel now.”
The same happens with heating systems. In Greece, for instance, many households rely on heating oil. When people hear that there might be shortages or rising prices, they immediately think: “This is a disaster — we need to refill our tanks now.”
When everyone behaves in this way at the same time, it creates a temporary supply gap in the market — a surge in demand that is not normal but driven by shock and panic. That is why we could potentially see stockouts.
However, my gut feeling is that there are currently enough vessels available. The real challenge is navigating through this period of uncertainty, when anxiety and psychological pressure are high in the market. Under those conditions, both companies and consumers tend to rush to secure supplies all at once, which can lead to temporary over-demand.