What Happens to Our Exports & Imports If the Strait of Hormuz Closes — A Freight Forwarder's Perspective

There's one question I can't avoid in client meetings these days: "What happens to our shipment if Hormuz closes?"

Honestly, I've had two big scares myself—in 2019 and 2024. The moment that strait name shifts from a news headline to a variable that actually moves our quote numbers, the phone doesn't stop ringing.

Today, I want to walk you through why Hormuz matters so much, straight from the trenches of export-import operations.

First, the map — where is Hormuz and why is it so narrow?

The Strait of Hormuz is the waterway between Iran and Oman, just 33 kilometers wide at its narrowest point. All the crude oil and LNG from Saudi Arabia, the UAE, Kuwait, Iraq, Qatar, and Bahrain inside the Persian Gulf have to pass through this bottleneck to reach the open ocean (Gulf of Oman → Indian Ocean).

Here's the problem: through this narrow passage flows roughly 20% of the world's seaborne crude oil and nearly 20% of global LNG. (US EIA, 2023–2024 baseline)

At its narrowest: 33km. On a map, it's shockingly thin.

So whenever Iran plays the "Hormuz blockade" card, global oil prices move first, then shipping rates and insurance premiums follow, and finally—the actual CIF cost for Korean exporters shifts.

Q. Why does this matter so much to Korean traders?

A lot of people say, "We don't ship anything to the Middle East, so why should we care?" Fair point—direct Middle East exporters are a minority. But here's the thing: when Hormuz shakes, even companies that don't trade with the Middle East feel it. Three reasons:

• Crude and LNG prices spike → bunker fuel (ship fuel) prices spike → BAF (fuel surcharge) climbs, pushing freight rates up across all routes.
• War Risk insurance premiums jump → total cost for all ships transiting the Middle East rises, passed straight to freight rates.
• Shipping lines adjust their Middle East schedules → the entire Asia↔Europe rotation gets thrown off.

I had a client—an automotive parts exporter shipping to Europe—whose FAK rates jumped about 18% in two weeks during the mid-2024 Hormuz tension spike. They weren't sending a single container to the Middle East.

What actually happened in the past

The Strait of Hormuz has never been completely closed in modern times. But we've seen "near-closure" events repeat themselves:

June 2019: Two tankers attacked in the Gulf of Oman → Lloyd's JWC (Joint War Committee) designated the entire Persian Gulf as a high-risk zone, pushing War Risk insurance rates to roughly 10 times their early-year levels.

2024: Israel-Iran mutual strikes → compounded by Houthi attacks in the Red Sea, container rates to the Middle East swung wildly in short bursts.

The pattern is always the same: "Rates and premiums spike even without an actual closure." Markets price in risk before it happens.

The first place numbers move during tension — War Risk Surcharge.

Four things container shippers need to watch — a checklist

If you've got cargo heading to the Middle East (Jebel Ali, Dammam, Bandar Abbas, Kuwait, etc.), you need to track these four items every time tensions flare:

1. War Risk Surcharge — published by the carrier at B/L issuance. Usually charged per TEU in USD.
2. War Risk coverage on cargo insurance — standard ICC(A) terms exclude war. You need separate War Clauses.
3. Carrier routing — ships calling at Bandar Abbas (Iran) can get tangled up in US OFAC sanctions. Watch out.
4. L/C shipment deadline — schedule skips are common during tension → delayed shipment → L/C expiry risk.

Most people overlook #4. If your L/C expires due to shipping delays, negotiation itself gets blocked—a cash crunch far worse than the freight surcharge.

Q. So what do I do in practice?

I usually walk clients through three steps.

Step 1 is exposure mapping. Figure out: "What percentage of our company's revenue flows through Middle East routes or depends on Hormuz transit?" You'd be surprised how much indirect exposure you don't know about. For example, shipments to Mumbai, India don't directly cross Hormuz, but rates move with tension in nearby waters anyway.

Step 2 is checking alternative route lead times. Some Middle East ports can be rerouted via Jeddah (Red Sea), Salalah (Gulf of Oman), or Karachi, but lead times can stretch by 7–14 days. For urgent orders, air freight might be the answer.

Step 3 is reviewing insurance and Incoterms. If you're selling CIF, make sure your cargo insurance has War Clauses attached. Check your buyer contracts for a "Force Majeure — strait closure" clause.

One schedule change at a Middle East port can ripple through the entire Asia-Europe rotation.

The vibe on the ground right now

Even into 2025, the Iran-US and Iran-Israel tension cycle repeats every few months. Carriers now treat "Hormuz tension = a constant" and keep a thin baseline War Risk Surcharge in place even during calm periods.

In other words, it's no longer "total peace → spike → back to zero." It's now "a low surcharge always baked in, with spikes on top of that." For shippers, that's actually more predictable.

But response speed still matters when a spike hits. Miss a quote by a week, and the deal can fall apart that same week.

Wrap-up — Hormuz isn't someone else's problem

Here's the summary:

• Hormuz is physically a 33km-wide strait, but it's the barometer for global energy and container rates.
• Even without direct Middle East trade, all exporters and importers feel indirect impact through fuel costs, freight rates, and insurance.
• You don't need a full closure for rates to jump. Risk shows up in your B/L and quote sheet before it hits the news.

I recently helped a food importer save about 12% on freight by switching one Dubai-transshipment route. That kind of optimization only comes from running the numbers yourself.

If you're curious about your company's Middle East exposure or need alternative route scenarios for the next tension spike, reach out anytime. Our team runs simulations using actual carrier schedules and published War Risk rates.