Maritime routes under threat as Israel-Iran conflict sends shockwaves through trade

Posted on June 23, 2025   |  

The Israel-Iran conflict is disrupting global shipping as shipowners and insurers respond to increased risks.

Cargo vessels are avoiding the Red Sea, Gulf of Aden, and Hormuz, with many rerouting around the Cape of Good Hope adding 10 to 12 extra days.

Ship movements through the Strait of Hormuz have slightly declined and naval escorts are now required for tanker passage.

War-risk insurance premiums have surged with some tanker voyages now facing over 50,000 dollars in additional charges.

Indian agricultural exporters are seeing shipping costs rise by 15 to 20% due to rerouting and insurance hikes.

Very Large Crude Carrier (VLCC) freight rates on Gulf to Asia routes have increased by 15 to 20% and some tankers are idling or waiting for escort clearance

Brent crude briefly jumped to 78.50 dollars before easing, while a full disruption could send prices as high as 150 dollars.

Exporters across Asia and the Gulf are adjusting contracts and bracing for longer transit times for sensitive goods.

Shipping remains active but strained and the next two months will show whether this is a temporary cost spike or a deeper crisis.