WASHINGTON — The deal to end the war between the United States and Iran could do more than calm oil markets — it could finally unclog one of the most important arteries in global trade. On Sunday, President Donald Trump announced an agreement to reopen the Strait of Hormuz, the narrow waterway that carries about 20% of the world’s oil supply and a massive volume of global cargo traffic. “Ships of the World, start your engines. Let the oil flow!” Trump wrote. By Monday, attention had shifted from oil prices to another critical question: how quickly shipping costs might fall.
The strait has been largely disrupted since the conflict began on February 28, and the consequences stretched far beyond the Persian Gulf. With vessels avoiding the area, freight rates surged worldwide. According to Peter Sand, chief analyst at freight intelligence platform Xeneta, spot container rates in June were running about 75% higher from China to the U.S. East Coast, 51% higher to Northern Europe, and 45% higher to the Mediterranean compared with pre-conflict levels.
The reason is simple geography. At its narrowest point, the Strait of Hormuz is only 21 miles wide. When the route becomes dangerous, shipping companies have few alternatives. Many vessels were forced to reroute around the southern tip of Africa, adding 10 to 14 days to voyages and significantly increasing fuel consumption.
Insurance costs also soared. Dylan Mortimer, a marine war-risk specialist at broker Marsh, said war-risk premiums climbed dramatically, in some cases adding hundreds of thousands of dollars to the cost of a single voyage. Tanker rates surged as well, especially on routes carrying crude oil from the Gulf region to Asia.
Even with the agreement announced, the disruption remains significant. Roughly 100 container ships remain trapped in the Arabian Gulf, while shipping giant Hapag-Lloyd reported that several vessels are still delayed, including one ship that has spent nearly four weeks in transit.
Industry experts caution that reopening the strait will not immediately restore normal conditions. Tobias Maier, who leads the Middle East and Africa business for DHL Global Forwarding, said customers should expect four to six months before shipping patterns fully normalize. Analysts at Kamco Invest similarly project that elevated freight rates could persist until a backlog equivalent to two to three months of cargo works through the system.
That lag matters because shipping costs eventually influence the price consumers pay for nearly everything. Clothing, electronics, furniture, appliances and automobile parts all become more expensive when transportation costs rise. The Strait of Hormuz disruption did not merely push oil prices higher; it increased the cost of moving goods globally, contributing to inflation pressures already weighing on households.
If shipping rates gradually decline, those savings could eventually reach store shelves. However, economists caution that the process takes time and depends heavily on continued stability in the region.
That remains the biggest risk. Mine-clearing operations are scheduled to begin later this week, and the U.S. naval blockade is being lifted. But shipping companies and insurers remain cautious. Any new incident could quickly reverse recent progress and send costs higher again.
For now, however, the direction appears positive. For nearly four months, a narrow stretch of water exerted outsized influence over global trade, energy prices and consumer costs. If cargo begins moving freely again, the benefits will eventually extend far beyond the Middle East — reaching warehouses, retailers and household budgets around the world.
JBizNews Desk
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