Gulf Supply Chain Disrupted by US-Iran Conflict Once Again

Renewed conflict between the US and Iran has once again disrupted maritime trade through the Strait of Hormuz. The waterway handles approximately one-fifth of global oil shipments and serves as a critical transit route for liquefied natural gas exports from Qatar.

Air raid sirens sound across Gulf states as both nations resume hostilities following weeks of relative calm. The breakdown could affect freight costs and transit times for energy shipments moving through the region.

Commercial vessels under attack

On 6 July, Iran's Islamic Revolutionary Guard Corps struck three commercial vessels near Oman, including a Qatari liquefied natural gas tanker. According to IRGC statements, the vessels ignored warnings and attempted to pass through a route lined with sea mines.

Washington responded with retaliatory strikes on Iranian military targets the following day. Tehran answered with missile and drone attacks on Gulf military bases hosting US forces.

By 8 July, US President Donald Trump declared the ceasefire "over". Iran then shut the Strait of Hormuz once again, accusing Washington of interfering with the waterway by facilitating alternative transit routes.

The closure immediately affected vessels carrying crude oil and LNG destined for Asian and European markets. Shipowners face the choice of waiting for the strait to reopen or rerouting around Africa, which adds weeks to delivery schedules.

Freight rates climb rapidly

The renewed conflict pushes crude prices to their highest levels in a month. Brent crude climbed to around US$85 a barrel this week, having traded near US$70 in early July following the agreement of a temporary ceasefire on 17 June.

The US benchmark, West Texas Intermediate, rose above US$80 a barrel during the same period. According to market data, Brent posted a single-day gain of 9.6% during the escalation, its steepest jump in a day since May 2020.

Vivek Dhar, Head of Commodities & Sustainability Research at CommBank, warned The Guardian that the market is entering a familiar pattern. "The clock has started ticking again on global oil inventory depletion," he says.

Dhar suggested that sustained conflict could send Brent towards US$100 a barrel within 10 days and as high as US$150 within 10 weeks if hostilities continue. That scenario would revive the kind of price shock last seen when fighting between the two countries first erupts in February.

Higher crude prices translate directly into elevated freight costs for buyers. Insurance premiums for vessels transiting the Gulf have also increased as underwriters reassess risk exposure.

Adding to these worries, the United Nations Conference on Trade and Development (UNCTAD) has warned that the broader macroeconomic consequences of this repeated disruption have yet to fully materialise.  UNCTAD cautions that the full picture of the Hormuz disruptions will only become clear in the second half of 2026, as elevated energy, shipping and insurance costs are fully absorbed through global value chains. This is a delay that could also impact global agricultural supply chains by squeezing vital regional fertiliser shipments.

Tanker operations disrupted

The United Arab Emirates says Iranian cruise missiles struck two of its oil tankers, the Mombasa and the Al Bahiyah, while in transit in Omani waters. One crew member was killed and eight others were wounded in the attack.

The IRGC claimed responsibility for the strike, saying the vessels ignore repeated warnings before being disabled. A separate incident saw a bulk carrier collide with another vessel near Qeshm Island, forcing an emergency evacuation of 23 foreign crew members, according to Iran's Fars news agency.

President Trump said the US will maintain the strait as open "with or without Iran" and initially announced plans to levy a 20% fee on vessels transiting the waterway to cover security costs. However, following immediate pushback and talks with regional leaders, President Trump backtracked on the toll threat. He instead proposed replacing the 20% cargo fee with "massive" trade and investment deals with Gulf nations, while still promising a full blockade of ships calling at Iranian ports.

Before the reversal, Abbas Araghchi, Iran's Foreign Minister, had dismissed the proposal on social media. "20% is of course too much. We will be fair," he wrote.

The International Maritime Organization also pushed back on the idea of unilateral tolls altogether, stating that passage through the strait "should remain free of any tolls and charges, in accordance with international law".

Energy infrastructure is spared the worst of the fighting this time around. That marks a notable shift from the opening weeks of the conflict in February and March, when US and Israeli strikes targeted Iranian energy facilities directly and Iran responded by bombing oil and gas installations across the Gulf.

The current round of strikes concentrates on military assets, coastal defence systems and vessels linked to shipping disruption in the strait.

Analysts note that both sides appear to be testing the limits of what the other will tolerate rather than pursuing the broader war aims seen earlier this year.

For an industry still recalibrating supply chains after the initial outbreak of fighting, the return of hostilities is a reminder of how quickly Gulf risk can resurface. Shipowners, insurers and buyers of Gulf crude and LNG now face fresh uncertainty over transit costs, security and the reliability of the strait itself.

With diplomacy continuing in parallel through Qatari and Pakistani mediation, the coming days are likely to determine whether this remains a contained exchange or escalates into something closer to the sustained conflict seen at the start of the year.