Strait of Hormuz Oil Prices Rise As Tanker Traffic Falls
Strait of Hormuz oil prices rise as tanker transits collapse and allies hesitate on a coalition, heightening near-term supply and price risk.
KEY TAKEAWAYS
- Transits plunged to 1-7 ships daily in early March versus a 129-ship February average.
- U.S. crude topped $100 per barrel on March 16, heightening near-term price risk.
- Trump had contacted seven nations but no confirmations and some allies declined, leaving a coalition unformed.
HIGH POTENTIAL TRADES SENT DIRECTLY TO YOUR INBOX
Add your email to receive our free daily newsletter. No spam, unsubscribe anytime.
President Trump on March 16 urged oil-dependent nations to join a U.S.-led naval coalition to secure tanker traffic through the Strait of Hormuz, a call that has traders watching Strait of Hormuz oil prices as transits collapsed and supply risk increased.
Transit Collapse Raises Price Risk
Daily transits through the Strait of Hormuz fell sharply to between one and seven ships in early March, compared with a February average of 129. On March 16, only three vessels were observed passing through, reflecting severe tanker disruptions. About 20 shipping incidents have been recorded in the Gulf since March 1.
The strait handles roughly 20% of the world’s oil, with China receiving about 90% of its supplies via this route. Reports of fuel shortages have emerged in Thailand, Pakistan, and Bangladesh as flows tightened. U.S. crude topped $100 a barrel on March 16 at 02:52 ET. The Atlantic Council chief executive estimated that each day the strait remains closed would add about $3 to $5 per barrel to oil prices.
U.S. Push for Naval Coalition Faces Allied Hesitation
President Trump said he had contacted seven nations to join a U.S.-led naval coalition to secure tanker traffic, but no country had publicly confirmed participation as of March 16. Some allies declined or hesitated to commit warships, with Australia among those not participating. Reports of an imminent announcement naming multiple countries agreeing to escort ships remained unconfirmed, and the plan was described as not yet ready.
U.S. policy has added complexity at sea. Washington has allowed certain Iranian tankers to transit the strait, and some non-Iranian vessels—including Chinese-flagged ships and a Greek vessel—departed after apparent Iranian verification near Lark and Kisham islands. These movements highlight the operational uncertainties carriers face while governments consider protective escorts.
Maritime monitors warn that the next 24 to 48 hours carry heightened risks from unmanned aerial and surface vehicles and missiles. Some analysts expect the fighting to last weeks to months, with shipping unlikely to return to full normality for about six weeks after hostilities end. At 21:17 ET on March 16, oil traded about 2% higher amid doubts that an international escort plan would materialize.
