Expert Column From the Red Sea to the Iran War,
Risks and Response Strategies of
Middle East Supply Chains

Key Summary at a Glance

The Red Sea crisis and the blockade of the Strait of Hormuz are increasing uncertainty in the global maritime logistics network, leading to a structural rise in supply chain risks. In particular, the Strait of Hormuz, through which about 34% of the world's oil trade passes, is a key chokepoint for global energy and shipping logistics, and a blockade could have a cascading impact on supply chains worldwide. Accordingly, companies need to enhance supply chain resilience through risk response strategies such as securing alternative transportation routes and strengthening supply chain visibility.

In the maritime logistics market, the impact of unpredictable events (Black Swans) varies, but following the 2023 Red Sea incident, the blockade of the energy choke point, the Strait of Hormuz, affects the entire global supply chain, so we analyze the risks associated with this.

1. Middle East-origin logistics risk changes

Currently, the geopolitical risks in the Middle East have shifted to a new phase, as the trend of diverting the Suez Canal, which began with the Houthi rebels' Red Sea attacks at the end of 2023, transitioned when the Strait of Hormuz was effectively blockaded by a U.S.-Israel attack on Iran at the end of February 2026.

Red Sea Crisis (2023 – present)

After the Houthis' attacks on vessels sailing through the Red Sea at the end of 2023, transit through the Asia-Europe route via the Suez Canal became impossible. Most global container shipping lines have diverted around the Cape of Good Hope, extending the sailing distance by about 3,500 nautical miles (about 6,400 km) and increasing voyage by 10 to 14 days. As a result, approximately additional 2 million TEU has been deployed on the Asia-Europe route, and reliability has dropped to below 50%, with the Cape of Good Hope detour service now regarded as the “New Normal.”

Hormuz Blockade (February 2026 – present)

On February 28, 2026, the United States and Israel launched a military operation against Iran (Operation Epic Fury), conducting precision strikes on nuclear facilities and leadership targets throughout Iran. In response, Iran attacked with missiles and drones across the Middle East, and the Iranian Revolutionary Guard Corps notified ships transiting the Strait of Hormuz of a “closure” of the strait. Subsequently, it was reported that more than ten ships were attacked, and the volume of shipping through the Strait of Hormuz decreased by more than 95%, resulting in a de facto “blockade.” As navigation through the Strait of Hormuz became difficult, a total of 3,200 ships, including oil tankers, and about 20,000 crew members were found to be trapped within the Strait of Hormuz.^[1]

Due to the de facto blockade of the Strait of Hormuz, the number of ships transiting daily, which averaged 126 before the war this year, has plummeted to seven. Since the outbreak of the war, 23 product carriers, 12 tankers, and 13 container ships exited the Strait of Hormuz, but it was reported that these were concentrated on vessels of specific countries.

[Hormuz Strait Traffic Volume] (Unit: ship) Source: Clarkson, Author's revision

2. The Strategic Importance of the Strait of Hormuz

The Strait of Hormuz is a global energy choke point where 34% of world crude oil trade, 25-27% of petroleum products, and 20% of LNG pass through. In particular, for Korea, about 3 million barrels (1.5 VLCCs) of crude oil are imported daily on average, with about 70% of this coming from the Middle East. Additionally, about 19% of the country's LNG imports and over 50% of naphtha are imported from the Middle East, so the impact would inevitably be significant if the Strait of Hormuz were to be blocked.

The importance of the Strait of Hormuz in global energy is significant, but for Gulf countries, as daily necessities are mainly transported through containers, the impact on these countries will inevitably be substantial if container logistics are disrupted. In fact, it has been found that the proportion of manufactured and industrial goods, which are mostly transported in containers among imports from the Middle East, is the highest. For reference, the container cargo volume exported and imported between Korea and the Middle East is about 206,000 TEUs (exports 143,000 TEUs/imports 63,000 TEUs), accounting for 1.2% of the domestic export and import container cargo volume.^[8]

3. Impact of Hormuz Blockade on Ocean Logistics Market

The blockade of the Strait of Hormuz immediately led to a rise in energy prices. After the war, on March 9, the price of WTI (West Texas Intermediate) oil surged to $119 and has since declined, currently ranging between $90 and $100. Bunker prices rose significantly compared to oil prices; the price of Marine Gas Oil (MGO), which was in the $700s per ton before the war, soared to as high as $1,800. Additionally, as ship fuel supply at the Port of Fujairah became unstable, ships concentrated on the Port of Singapore, resulting in an even greater price increase. In addition to bunkering costs, war insurance premiums also rose sharply; during peacetime, the cost for operating in the Strait of Hormuz was 0.125–0.4% of the vessel's value, but after the war, it increased significantly to 1.5–3%.^[6]

[MGO Price Trend] (Unit: USD/mt) Source: Clarkson, Author's revision

[Change in Bunkering Prices After the Strait of Hormuz Closure]

Due to the closure of the Strait of Hormuz, freight rates in the shipping market have risen, and in the short term, as competition intensifies to secure alternative crude oil from West Africa, Latin America, and North America in response to the disruption of Middle Eastern oil supplies, ton-miles are expected to increase. Furthermore, if the upward trend in bunker fuel prices continues, increased operating costs will lead carriers to reduce vessel speed, resulting in a decrease in supply and creating conditions for freight rate increases due to supply-demand imbalance. In fact, the Saudi Arabia-Korea VLCC freight rate increased from $220,000/day before the war to $400,000/day after the war. In addition to crude oil tankers, freight rates for liquid cargo vessels, including petroleum product tankers, have generally increased.

Container freight rates have risen, particularly in the Middle East market, with the additional charges shippers have to pay increasing by $2,000-$3,000 per TEU due to the imposition of War Risk Premium, Emergency Bunker Surcharge, and Abnormal Discharge Expenses. In particular, due to the suspension of Middle East services, vessels deployed for these services are relocating or being redeployed to nearby ports, resulting in an increase in the number of ships waiting at alternative or nearby ports.

4. Rerouting Service due to Strait of Hormuz Blockade

Tanker (Crude Oil)

The volume of crude oil passing through the Strait of Hormuz is 14 to 15 million barrels per day, and the directly available detour pipelines are Saudi Arabia's East-West pipeline and the United Arab Emirates' (UAE) Abu Dhabi Crude Oil Pipeline. The UAE's Abu Dhabi pipeline is exported through Fujairah Port, which recorded an average of 1.9 million barrels per day after the war, but since the third week of March, due to Iranian attacks on the port, the operating rate has dropped below 30-40%, limiting the volume that can be rerouted. The East-West pipeline operated by Saudi Arabia is exported through Port of Yanbu, with average daily exports increasing significantly from 1.6 million barrels before the war to 3.4 million barrels after the war. However, the detour capacity is only 4 to 5.5 million barrels per day, which is just 30-35% of normal export volume, so if the Strait of Hormuz blockade continues for a long time, there are limitations as an alternative.^[7]

[Major Oil Pipeline in the Middle East Region] Source: Global Energy Monitor (https://globalenergymonitor.org/, Search Date: March 4, 2026)

Container

After the war, most global shipping lines have suspended services passing through the Strait of Hormuz indefinitely. However, some cargo is being handled through detour services, such as unloading outside the Strait of Hormuz or at western Saudi Arabian ports, followed by inland transportation. Additionally, goods are being transported overland to Iraq via the Port of Mersin in Turkey or the Port of Aqaba in Jordan, or unloaded and held at transshipment ports such as Singapore or India. Shipping lines are offering several options to shippers after the war, including temporary storage until routes resume, returning cargo to the origin, or redirecting it to alternative destinations.

[Reference Image for Container Alternative Service]

5. Future Outlook and Response

Currently, three possible scenarios can be identified. First, a scenario involving a ceasefire within three months or the opening of the Strait of Hormuz. In this case, in the short term, there will be port waiting and congestion due to the temporary movement of ships trapped in the Strait of Hormuz and the entry of ships waiting nearby, and it is expected to gradually return to normal after one to three months. Second, a scenario where the war is prolonged for more than three months. If the war is prolonged, shipping freight rates will rise, scrapping of ships will decrease, and newbuilding orders for eco-friendly ships may increase. Additionally, demand for alternative ports may increase significantly, leading to changes of logistics hubs. In fact, for LNG, there is a scenario emerging where the logistics hub is being reorganized from the Middle East to the United States. Third, a scenario where, as is currently the case, some countries make individual contacts with Iran and pass through the strait on a limited basis. Currently, it is known that in order to navigate through the Strait of Hormuz, negotiations with Iran are required, followed by using the safe route near Larak Island, which is Iranian territorial waters. Oil tankers and LPG carriers owned by India and Pakistan have already navigated through, and it is known that China is also in negotiations with Iran. Therefore, in the future, the nationality of ships and their operating companies may affect whether they can navigate through the Strait of Hormuz, so this needs to be considered.

The Red Sea crisis and the Strait of Hormuz blockade have revealed the structural vulnerabilities of global supply chains beyond increasing uncertainty in energy supply, demand, and the shipping market. Even if the war ends or passage through the Strait of Hormuz resumes in the future, it is expected that it will take a considerable amount of time for normalization. What is required of shipping companies and shippers is the internalization of strategic resilience, which goes beyond short-term responses and ensures that “alternative routes always exist.” Accordingly, there is a need to design supply chains that can spread risks, rather than focusing on cost optimization.

Amid these geopolitical risks, the role of logistics companies is also changing. Beyond simply providing transportation services, the importance of integrated logistics solutions that support overall supply chain operations—such as securing real-time supply chain visibility, designing alternative transportation routes, and analyzing risk scenarios—is growing. Accordingly, various digital logistics platforms, including Cello Square provided by Samsung SDS, are expected to support shippers' supply chain decision-making by providing supply chain visibility, thereby reducing logistics management and information costs.

GunWoo Choi

Associate Researcher

Associate Researcher

GunWoo Choi

Current researcher of Shipping Logistics
and Maritime Policy Research Department
at Korea Maritime Institute (KMI)
Former researcher of Shipping Finance Research
Department at KMI
Former researcher of the Port Research
Division at KMI

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