Middle East war is already affecting shipping — and Europe won’t be spared

Elisabeth Braw is a senior fellow at the Atlantic Council, author of the award-winning “Goodbye Globalization” and a regular columnist for POLITICO. Her new book, The Undersea War, is out later this year.  

Since the U.S. and Israel attacked Iran on Feb. 28, the Strait of Hormuz — the narrow and crucial passage at the mouth of the Persian Gulf — has become extremely dangerous to pass. “Sanctioned tanker laden with flammable gas runs Hormuz gauntlet,” read one shipping headline just last week. And as the number of ships weighing whether to attempt this voyage grows, the escalating situation will have painful implications for global shipping as well as the world’s economies — and Europe won’t be immune.

The ship in question was the Danuta I, a recently sanctioned LPG carrier likely “laden with Iranian LPG,” Lloyd’s List, a maritime news service, reported. Perhaps the ship’s owners felt they could take the risk precisely because the ship was transporting Iranian petroleum gas, and Iran — situated on one side of the strait, with Oman on the other — is the actor most likely to attack any ships sailing through.

Indeed, the government in Tehran has vowed to attack any ship trying to transit the strait, through which some 20 percent of the world’s oil and natural gas passes on its way from the Persian Gulf to global markets. Large volumes of aluminum and fertilizer pass through the strait as well.

Or rather, those are the transit volumes under ordinary circumstances. As of Feb. 28, conditions in the Strait of Hormuz have been decidedly extraordinary. “Right now, ships waiting to transit both on the inside and outside of the Hormuz are awaiting developments and not transiting,” said Svein Ringbakken, CEO of maritime war-risk insurer DNK. “Shipowners take the Iranian threats that ships will be attacked seriously and factor these into their risk assessments.”

Even when covered by war-risk insurance (yes, it’s available in wars, including this one), shipowners are highly cautious when it comes to active war zones like the strait. “They’re primarily concerned about ensuring the safety of their crews. To await developments is natural in an early phase of the conflict with major combat operations ongoing,” Ringbakken explained. Only a few ships have been able and willing to transit the strait since clashes began, and like the Danuta I, most of them were shadow vessels transporting Iranian oil.

The obvious question now is how long the conflict will last. Five days in, nine ships had already been hit or directly targeted in the strait or surrounding waters, with three crew members killed. And while U.S. President Donald Trump has said the war may last up to four to five weeks, wars famously deliver no certainty.

Furthermore, because shipping is global by its very nature, Europe will be affected as well. A Swedish-owned tanker, the Stena Imperative, which was transporting oil for the U.S. military, is among the vessels that have been struck. Meanwhile, many more ships waiting north and south of the strait are either owned or flagged in Europe, or are carrying cargo bound for the continent — mostly oil and gas, and possibly aluminum and urea, a nitrogen fertilizer crucial to global agriculture and thus food security.

Fortunately, the EU and the U.K. import most of their aluminum and urea from other countries, but they do import significant amounts of diesel, gasoline, oil, jet fuel and kerosene from the Gulf states.

Also, while many of the ships idling at the strait’s southern entrance (southeastern, to be precise) will likely leave if the war lasts longer than, say, the end of this week, it’s a different story for the several thousand ships still inside the Persian Gulf. They’re trapped there, and the dangers in the strait mean most don’t dare transit it to reach their next destinations — let alone get back to the Gulf to collect more. War insurance would cover damage to the ship and cargo, but no war insurance can bring lives back.

“A prolonged suspension of ship transits, particularly oil and gas tankers, could have a profound effect on energy prices,” Ringbakken pointed out. Indeed, on March 6, Qatar’s Minister of State for Energy Affairs Saad Sherida al-Kaabi told the Financial Times that the war in the Middle East could “bring down the economies of the world.” All Gulf energy exporters would declare force majeure and shut down production within days, he said.

Iran has already demonstrated that it’s willing to retaliate against U.S. and Israeli attacks by striking Gulf countries. If the war continues, it may well decide to launch a campaign against selected vessels in the Gulf. To be sure, targeting merchant vessels violates international law — but Iran has never been a stickler for international rules, and it’s unlikely to fully commit to them now, especially after Trump recently told journalists he doesn’t “need international law,” and Defense Secretary Pete Hegseth openly dismissed “stupid rules of engagement” when speaking about the war against Iran.

Imagine constant assaults on ships in the Persian Gulf — ships that represent virtually every country on the planet and are laden with cargo bound for worldwide destinations. If that comes to pass, European leaders wouldn’t be the only ones pleading with Trump to end the war. In fact, the whole world would join Qatar’s energy minister in sending distress signals. (Such strikes would also result in devastating oil spills.)

Even if ships in the Gulf only continue to be hit by occasional drone and missile strikes, they, their crews and their cargoes will suffer. So would the economy — including America’s. While Trump may not care about international law, he does care about the stock market — and a large chunk of the world’s stock markets depend on the Strait of Hormuz. Let’s hope he heeds that call.