Tanker Traffic Halts in Strait of Hormuz, Raising Costs

Mar 5, 2026

74 min

Mar 5, 2026 13:30

Tanker traffic collapses in Strait of Hormuz, spiking insurance, fertilizer costs

## Shipping Disruption in Hormuz

Tensions in the Strait of Hormuz have led to a significant reduction in tanker traffic, impacting global energy and trade. This vital waterway, which facilitates about 20% of the world's oil and LNG shipments, is experiencing a near standstill due to security concerns. Reports indicate that as of early March, around 150 tankers are anchored in the Gulf, unable to proceed.

## Insurance and Freight Costs Surge

The halt in shipping has triggered a sharp increase in insurance premiums. War-risk insurance rates have risen dramatically, with premiums on a $100 million tanker jumping from $200,000 to $1 million. Many insurers have also withdrawn coverage for vessels in the region, further complicating shipping operations. Consequently, freight rates for large crude carriers have skyrocketed, reaching $350,000 per day.

## Impact on Fertilizer and Food Prices

The disruption extends beyond energy markets, affecting global fertilizer supplies. The Gulf region is a key exporter of nitrogen-based fertilizers, and the shipping slowdown has already caused a spike in prices. Urea prices have increased by $60–$80 per ton, potentially impacting agricultural production and food costs worldwide.

## US Response and Global Implications

In response to the situation, the US has suggested it might escort tankers through the strait to ensure continued energy shipments. This move aims to stabilize the flow of oil and LNG, but the ongoing disruption poses risks to global supply chains and commodity prices. The situation remains fluid, with stakeholders closely monitoring developments.

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