Israel-Iran conflict yet to have major impact on shipping

The Strait of Hormuz between Iran and Oman (Photo: AdobeStock/Phaata)

The ongoing conflict between Israel and Iran has yet to have a major impact on shipping markets, but there is still a major concern regarding the potential closure of the Strait of Hormuz between Iran and Oman.

Judah Levine, head of research at analyst Freightos, said in a note that the strategic route is vital to the Persian Gulf countries, which export 20% of global oil supplies. A disruption could have a significant impact on oil prices and international shipping routes.

The study found that global oil supplies are currently adequate, which could help mitigate any sudden price spikes if the strait were to be closed. However, any blockade would certainly alter shipping routes and cause volatility in both oil and shipping markets.

Brent crude opened at $72.20 on Wednesday, up from $66.80 on June 12 before Israel’s attacks on Iran. West Texas Intermediate crude was at $72.92 on the New York Mercantile Exchange; JP Morgan has forecast a peak of $66 a barrel in 2025.

The benchmark diesel price, which is used as the basis for most fuel surcharges, has seen its biggest jump since January and its third-largest increase since early 2024.

Only 2% to 3% of global container volume passes through the waterway, so the immediate impact on the container market would be largely felt in the Middle East. Levine said a shutdown would require the diversion of transshipment volumes, particularly affecting Dubai's Jebel Ali Port - the busiest transshipment hub in the Gulf. He said this could cause congestion at alternative South Asian ports and raise freight rates.

Israeli shipping line Zim said on Monday that operations at the Israeli ports of Haifa and Ashdod were operating normally despite the Iranian missile attacks.

Container freight rates on the eastbound Trans-Pacific are volatile amid geopolitical tensions and ongoing trade negotiations.

According to the Freightos Baltic Index, the China-US tariff truce suggests demand is cooling, following a surge in capacity as carriers restore services and add new sailings, which may have outpaced demand. This may have led to some vessels departing with underfilled holds.

In the week ending June 13, rates from Asia to the US West Coast rose 9% to $5,994 per FEU. Rates from Asia to the US East Coast rose 11% to $7,099 per FEU.

Levine said this is likely to push rates, which have recovered since May, further lower. Daily rates to the West Coast, despite a brief spike, were down 3% from last week’s average, suggesting a market correction.

Two U.S. companies have sued the Trump administration over the legality of the tariffs, asking the U.S. Supreme Court to expedite the case.

A tentative trade deal between the U.S. and China will maintain a minimum tariff of 30% on Chinese goods and 10% on U.S. exports. Levine said early buying by shippers, fueled by anticipation of tariff adjustments, has led to early loading. This has led to a surge in container volumes, but that is likely to subside.

The expected Sino-U.S. deal, if confirmed, could spread cargo volumes across the traditional peak months, reducing the urgency seen earlier in the year. Still, the National Retail Federation’s forecast for July arrivals compared to April suggests that some of the pre-consolidation could dampen volume strength for the remainder of 2025, regardless of whether a trade deal is finalized.

The volatility in the Trans-Pacific is reflected in recent peak season surcharges (PSS) announced by ocean carriers, which took effect on various dates in July. These include CMA CGM’s $4,100/container from Asia to Northern Europe; Maersk’s $4,000/container from the Indian Subcontinent and the Middle East to the West Coast of North America; and Hapag-Lloyd’s $500/container from the Indian Subcontinent and the Middle East to North America.

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Source: Phaata.com (According to Freight Waves)

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