- The Strait of Hormuz faces a sudden halt in oil tanker traffic due to insurance withdrawals
- This disruption is driven more by financial decisions than direct Iranian military attacks on tankers
- US President Trump has remained silent on the insurance crisis despite rising energy prices
The sudden halt of oil tankers through the Strait of Hormuz may look like a wartime disruption, but some analysts believe it could also be the opening move in a geopolitical strategy echoing one of Washington's oldest Gulf playbooks.
Energy economist Anas Alhajji says the global energy system has entered "uncharted territory" after insurers abruptly withdrew war risk cover for ships moving through the world's most critical oil chokepoint.
"We are entering uncharted territory across multiple energy and commodity markets including crude oil, refined products, LNG, natural gas liquids, fertilizers, methanol and other petroleum derivatives," Alhajji said.
The trigger for the crisis was not a direct Iranian strike on tankers but a financial shock that froze shipping activity almost overnight.
According to Alhajji, major European and global insurance companies suddenly cancelled war risk coverage for vessels in the Strait of Hormuz or raised premiums so sharply that shipowners stopped sailing altogether.
"No one anticipated this," he said. "While the world has experienced shipping disruptions in recent decades, nothing quite like this has occurred before."
The Strait of Hormuz is one of the most important arteries in global energy trade. Roughly 15 to 20 percent of the world's oil supply and around 20 percent of global LNG shipments pass through the narrow waterway connecting the Persian Gulf to global markets.
But Alhajji argues that the disruption is being driven less by Iranian military action and more by decisions taken inside the global financial system.
"Until Iran actually attacks and sinks a major oil tanker in the strait, the real disruption is coming from insurance cancellations and rate hikes," he said.
What has raised eyebrows, he noted, is the response from Washington.
Trump's silence
Despite frequently criticizing high oil prices, U.S. President Donald Trump has remained largely silent about the insurance crisis even as it disrupts global trade and pushes energy prices higher.
"The silence from President Trump on this insurance debacle is striking," Alhajji said. "It raises suspicions that the broader campaign against Iran may involve larger geopolitical and economic objectives."
One such objective could involve reviving a Cold War era maritime strategy.
Trump has said the U.S. Navy could escort oil and LNG tankers through the Strait of Hormuz if the situation worsens. The move would mirror the 1980s tanker escort operations when American naval forces protected Kuwaiti tankers during the Iran Iraq war.
If that scenario unfolds it could reshape global energy economics.
Military escorts may reduce the risk of attacks but they increase transport costs, insurance premiums and delays, effectively raising the cost of exporting oil and LNG from the Gulf.
"That raises the cost and risk of Gulf shipments and increases the relative competitiveness of U.S. oil and LNG," Alhajji said.
India in crosshairs?
The consequences are already rippling through emerging economies including India.
About a quarter of India's fertilizer imports transit the Strait of Hormuz and the country's fertilizer industry relies heavily on imported Gulf gas and oil. With LNG supply disruptions particularly from Qatar, Indian authorities have already ordered fertilizer producers to reduce natural gas consumption.
The timing could not be worse as the disruption is unfolding just before India's key planting season.
"If agricultural output falls significantly this year, India could end up importing more agricultural products from the United States. That is precisely the outcome Washington has long sought," Alhajji said.
The crisis is also hitting poorer economies. Bangladesh has begun cutting power supply as LNG imports tighten while Egypt and Jordan have lost gas flows from Israel. At the same time some Gulf producers have curtailed output of oil, LNG and petrochemicals amid the turmoil.
Energy markets are now bracing for prolonged volatility.
Citigroup expects Brent crude to trade between 80 dollars and 90 dollars per barrel in the near term if the conflict de escalates within one to two weeks following leadership changes in Iran or a strategic pause by the United States.
Goldman Sachs estimates that oil prices currently include an 18 dollar per barrel geopolitical risk premium linked to the war. If only half the oil flows through the Strait of Hormuz are disrupted for a month the bank expects the premium to fall to around 4 dollars per barrel.
But the worst case scenarios are far more dramatic.
Consultancy Wood Mackenzie warns oil prices could surge above 100 dollars per barrel if tanker flows are not quickly restored.
"Higher oil and gas prices are certain as the closure of the Strait of Hormuz threatens to disrupt 15 percent of global oil supply and 20 percent of global LNG supply," said Alan Gelder, senior vice president of refining and oil markets at Wood Mackenzie.
For Alhajji the stakes go far beyond energy prices.
"If the insurance crisis persists and the conflict does not end soon the world risks spiraling into a severe economic and political crisis," he warned.
"Global trade flows are shifting dramatically and if this continues long enough we could even see regime change. Just not necessarily where people expect."
