The Strait of Hormuz – the narrow waterway between Iran and Oman – has been functionally closed since the end of February, when the war in Iran began. While the closure is dominating energy market headlines (about 20% of global oil flows normally transit the strait), the impact on the container shipping market has been significant, but still much less dramatic.

Judah Levine, Head of Research at Freightos, explains how the closure is impacting the container market, what to expect if the blockade stretches on, and what will happen once it reopens.  Keep reading or watch the short video for the full analysis.

Key Takeaways

The Strait of Hormuz handles about 20% of global oil supply but only 2-3% of container volumes. While its closure has been very disruptive for Gulf-bound containers, the broader container market has been unaffected operationally, but is facing upward rate pressure from rising fuel costs.

While container rates are rising, prices still remain well below Red Sea crisis levels and even beneath last year’s peak season highs, as weak demand and overcapacity are limiting the extent of the rate hikes.

The key risk is fuel availability: bunker supply at Asian hubs like Singapore is tightening, and actual shortages could force carriers to slow steam or blank sailings – which would reduce capacity and possibly push rates up more meaningfully than cost-driven surcharges alone have managed.

Even if the Strait reopens soon, fuel prices and supply are likely to take time to normalize, meaning lingering cost pressure heading into peak season.

A regional disruption, not a global one

For containers, the strait handles only about 2–3% of global volumes, with the UAE’s Jebel Ali port serving as the main hub. That’s a fraction of the roughly 20% of container traffic that normally moves through the Red Sea, for comparison to another recent crisis. So while the closure has created real operational challenges for cargo moving to and from the Gulf states, it has not caused broad operational market disruptions otherwise.

Gulf-bound containers are moving again –  via transshipment through west coast India ports, then feeder services to accessible ports in Oman and the UAE, followed by road transport to final destinations. An alternative route via Jeddah in Saudi Arabia, accessed through the Mediterranean and northern Red Sea, is also in use. 

But these workarounds weren’t designed for these volumes: port congestion, vessel bunching (with waits of 7–10 days reported at some UAE ports), trucking shortages, and border-crossing complications are all adding delays and costs. Freightos Terminal Shanghai-to-Jebel Ali container rates have quadrupled from under $2,000 to above $8,000 per container since the start of the war.ams do today, and it’s exhausting. The third is where mini‑tendering comes in.

But fuel costs are a market-wide factor

While the flow of global containers remains undisturbed, what is being felt across the market is the rising cost of fuel. Bunker fuel prices climbed sharply after the strait closed, and carriers have responded with emergency fuel surcharges ranging from $200 to $500 per container across lanes, alongside a flurry of GRIs and peak season surcharges announced for March, April and into May.

However, weak seasonal demand and persistent overcapacity are limiting how much of those increases are actually sticking. 

On the major east-west lanes, rates have risen moderately – Freightos Baltic Index transpacific rates are up roughly $800 per container, less on Asia-Europe – but remain well below Red Sea crisis levels and even below pre-Lunar New Year peaks earlier this year. 

On Asia-Mediterranean, rates have actually fallen relative to before the Strait closure despite the surcharge announcements. So the market is absorbing some of the fuel cost increase – rates are likely higher than they otherwise would be if there was no crisis – but overcapacity and soft demand are acting as a counterweight.

Fuel availability is the risk to watch

The more serious concern looking ahead isn’t just the price of fuel, but its availability. Bunker fuel supply in Asian hubs like Singapore is tightening, and while early reports of imminent shortages may have been overstated, analysts warn that a prolonged closure could lead to real supply constraints within the next two to three months.

If that happens, carriers would likely respond by slow steaming or blanking sailings to conserve fuel – measures that would reduce effective capacity and could push rates up more meaningfully than cost-driven surcharges alone have managed so far. If such supply constraints coincide with peak season demand increases later in the year, the rate impact could be significantly more pronounced than what we’ve seen so far. the same amount of time and energy on lanes that are fundamentally different in importance and behavior.

What happens when the strait reopens?

Even once the strait does reopen, a return to normal won’t be immediate. There will be some vessel bunching as ships exit the Gulf and return to their regular rotations, potentially causing temporary congestion at Far East origins. But given the relatively small share of global container capacity involved, this shouldn’t be severely disruptive, especially if it happens during a low-demand period.

More importantly, fuel prices and supply are likely to take months to fully normalize, meaning some lingering cost pressure on rates even after the operational disruption ends.stops being something you “do in Q1” and becomes part of how you manage your network year‑round.

The bottom line

About two months into the conflict, the Strait of Hormuz closure is a serious regional disruption for Gulf-bound containers, but it has not become the kind of systemic shock that the Red Sea crisis represented. 

For the broader container market, the main concern is fuel costs – but even so the main check on rate increases has been the same overcapacity that was expected to define 2026 before the war began. The risk scenario to watch is whether elevated fuel prices and potential supply shortages tip the balance, particularly as peak season approaches.