Oil majors suspend Hormuz shipments as Iran warns ships against transit

Multiple major oil companies and top trading houses suspended crude and fuel shipments through the Strait of Hormuz on February 28, 2026, hours after U.S. and Israeli strikes hit Iran. Reuters confirmed the suspensions with four trading sources. The UK Royal Navy reported 'significant' military activity in the strait by late Saturday.

The Strait of Hormuz handles roughly 20 percent of the world's daily seaborne oil supply — about 20 million barrels per day. It also carries 22 percent of global liquefied natural gas trade. There is no significant alternative route: pipelines that bypass the strait have only about 2.6 million barrels per day of unused capacity, far less than what the strait normally handles.

Iran has threatened to close the strait repeatedly over the past two decades. In February 2026, weeks before the strikes, Iran conducted live-fire military drills inside the strait's shipping lanes — a pointed warning to 🌲Washington as nuclear talks were underway. Iranian lawmakers voted in June 2025 to support closure; a final order would require Supreme Leader Khamenei's approval.

Iran sits along the strait's northern shore. At its narrowest point — roughly 33 miles wide — the shipping lanes fall inside the territorial waters of Iran and Oman under international law. That geography gives Tehran real leverage: even without a formal blockade, Iran can mine the waterway, deploy fast attack boats, or use GPS jamming to disrupt commercial traffic. During the June 2025 war, 1,000 vessels per day experienced GPS interference near Iranian waters, causing tanker collisions.

Closing the strait would hurt Iran too. Iran's oil exports — roughly 1.5 million barrels per day, primarily sold to China — also pass through the strait. That revenue is Iran's primary source of income. Economists describe closure as a 'high-risk, high-cost' option for Tehran that would destroy its own exports while destabilizing its main customers.

Saudi Arabia and the UAE have contingency pipelines that can bypass the strait. The U.S. Energy Information Administration estimated about 2.6 million barrels per day of unused capacity in existing UAE and Saudi pipelines as of June 2025. That capacity covers only a fraction of normal strait traffic, meaning any sustained disruption would still cause significant global shortages.

Global banks have modeled the price impact. JP Morgan estimated a full Hormuz blockade could push Brent crude above $120-$130 per barrel. Barclays estimated even a partial supply disruption could add 15-20 percent to crude prices. Higher oil prices feed directly into gasoline prices for American consumers, jet fuel costs, heating costs, and inflation across virtually every sector of the economy.

Airlines suspended Middle East flights immediately. Lufthansa, Virgin Atlantic, Air India, IndiGo, Biman Bangladesh Airlines, and Wizz Air all announced suspensions through at least March 7, 2026. Iraq, Kuwait, Bahrain, Qatar, and the UAE closed their airspaces following the strikes, redirecting commercial aircraft away from the conflict zone.

Iran exports approximately 1.5 million barrels of oil per day, almost entirely to China. China is the world's largest oil importer and has relied on Iranian crude partly because U.S. sanctions made it cheaper. A war that destroys Iranian oil infrastructure — or closes the strait — removes a significant supply source for China and increases Beijing's energy costs and its dependence on Saudi and Russian oil.