The confrontation between U.S. and Iranian forces widened on Wednesday after a U.S. submarine struck an Iranian warship off Sri Lanka, compounding a crisis that has halted normal transit through the Strait of Hormuz for the fifth day. The stoppage has trapped significant volumes of oil and liquefied natural gas that normally move through this strategic waterway.
Shipping traffic has been severely disrupted, with at least 200 ships - a mix of oil and LNG tankers plus cargo vessels - observed at anchor in open waters off the coasts of major Gulf producers including Iraq, Saudi Arabia and Qatar, according to ship-tracking estimates derived from the MarineTraffic platform. Hundreds of additional vessels remain outside the Hormuz approaches and are unable to reach port, according to shipping data.
The Strait of Hormuz is a critical conduit for global energy flows, carrying about one-fifth of the worlds oil and LNG. The paralysis of transit through the strait is therefore directly constraining exports from the region and pressuring logistics across energy markets.
Earlier in the day a Maltese-flagged container ship, the Safeen Prestige, was struck by a projectile while en route to the northern entrance of the Strait of Hormuz, shipping sources said. The damage forced the crew to abandon the vessel. In a separate development, Saudi Aramcos largest domestic refinery and a key crude export terminal, Ras Tanura, was struck on Wednesday, according to four sources.
Regional producers have begun to feel the immediate operational effects. Qatar suspended gas output and Iraq reduced oil production after both countries exhausted storage capacity because they could not load cargoes onto tankers. Saudi Arabia, the UAE and Kuwait have also been struggling to load oil, although it was not yet clear whether they had formally reduced production.
Despite the broader standstill in shipping, there was an isolated transit on Tuesday when the Suezmax tanker Pola navigated the Strait of Hormuz to reach the United Arab Emirates to load crude, industry sources and LSEG ship-tracking data showed. The Pola had its AIS transponder switched off late on March 2 as it approached the strait and reappeared the following day off Abu Dhabi.
In response to the disruption, U.S. President Donald Trump said he would offer insurance and naval escorts to vessels exporting oil and gas from the Middle East to limit the impact on global energy prices. He also said he had directed the U.S. International Development Finance Corporation to provide political-risk insurance and financial guarantees for maritime trade in the Gulf. "No matter what, the United States will ensure the free flow of energy to the world," he wrote in a social media post.
Energy markets have moved sharply since the conflict widened. Oil prices rose for four consecutive sessions and were up about 12% since the war began on Saturday, as U.S.-Israeli strikes on Iran disrupted Middle East supplies. On Wednesday prices dipped, with the pace of gains slowing compared with earlier sessions.
Goldman Sachs adjusted its outlook for crude in response to the situation, raising its Brent forecast for the second quarter by $10 to $76 per barrel and its West Texas Intermediate forecast by $9 to $71 per barrel. The bank cited the risk of longer-than-expected disruption to oil and gas exports through the Strait of Hormuz and the potential for damage to production facilities. Its base assumptions include persistently low flows through Hormuz causing large declines in OECD inventories and a drop in Middle Eastern production in March.
Industry voices cautioned about the practical limits of protecting maritime commerce in the affected areas. Jakob Larsen, chief safety and security officer at the shipping association BIMCO, said that providing protection for all tankers operating in areas currently threatened by Iran was unrealistic, noting it would require a very large number of warships and other military assets.
Some Asian refiners are already feeling supply-chain strain. Four traders and three analysts told sources that certain refiners may have to reduce output because suppliers in the Gulf cannot deliver prompt replacement cargoes amid the shipping freeze. Asia sources roughly 60% of its oil from the Middle East, a concentration that has heightened the regions vulnerability to the current disruption. In response, refiners in Indonesia and Japan are procuring more U.S. crude to replace lost Middle East volumes, while two company sources said India would consider buying more oil from Russia.
The present combination of anchored vessels, damaged ships, curtailed loadings and revised market forecasts underscores the immediate fragility of supply chains and the tight linkage between maritime security and energy markets. With significant volumes of crude and LNG unable to move and storage nearing capacity in producing countries, the near-term trajectory for inventories, refinery runs and regional production remains uncertain.
The situation continues to evolve, with operational, logistical and geopolitical variables all affecting how quickly exports can resume and how energy markets respond.