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US-Iran War Puts Strait Of Hormuz Under Fire, Disrupting Global Energy Trade

Home News US-Iran War Puts Strait Of Hormuz Under Fire, Disrupting Global Energy Trade

US strikes on Iran escalate Strait of Hormuz tensions, spiking energy prices, disrupting trade and heightening global geopolitical risk.

Trade traffic within the Strait of Hormuz has nearly halted as fuel tankers and other shipping remain vulnerable to attacks and are virtually uninsurable, amplifying fears that the US-Israeli war on Iran is turning into a broader global conflict with major economic consequences.

Global energy prices, especially, are a key focus point since the Strait serves as a critical maritime artery for roughly 20% of the world’s oil flows — 70% of that oil goes to China, South Korea, India, and Japan.

Meanwhile, President Donald Trump’s standoff with EU leaders over the use of certain military bases is making an already contentious situation worse.

Chokepoint Under Fire

Iran’s Revolutionary Guards claim total control of the passage just days after US-led airstrikes killed Iran’s Supreme Leader, Ayatollah Ali Khamenei. The UK Maritime Trade Operations Center is actively documenting multiple vessel attacks and electronic interference affecting navigation in and around the Gulf.

A bomb-carrying drone boat struck a Marshall Islands-flagged tanker in the Gulf of Oman, killing at least one mariner, according to the Wall Street Journal, citing Omani authorities.

The economic shock was swift. West Texas Intermediate crude notched its biggest two-day rally since March 2022. European natural gas prices nearly doubled in 48 hours. The biggest jolt came after QatarEnergy halted liquefied natural gas production following attacks on its facilities, sending European gas prices soaring more than 40%. The United States Oil Fund LP rallied over 15% over the past five days.

Analysts are also at odds over whether a total Iranian blockade will occur.

Insurance Vanishes, Ships Stall

“A sustained, structural military blockade by Iran that totally stops ships from passing through is unlikely,” Morningstar Equity Director Joshua Aguilar said. Still, the commercial reality may produce the same effect.

“Ships may not pass through because no insurance is willing to cover them,” Aguilar added

Mutual insurers such as the London P&I Club, NorthStandard, UK P&I Club and Noord Nederlandsche P&I Club provide coverage for vessels navigating volatile regions. If that coverage drops, shipping companies face untenable exposure — effectively freezing commerce even absent a formal blockade.

In response, Trump said on his Truth Social platform that he had ordered the US International Development Finance Corporation to offer political risk insurance and guarantees “for the financial security of all maritime trade, especially energy, traveling through the Gulf.” He also said the US Navy would escort tankers through the Strait.

BIMCO’s Chief Safety & Security Officer, Jakob Larsen, scrutinized the logic of Trump’s plan. Indeed, naval escorts would reduce the threat ships currently face.

“That said, providing protection for all tankers operating in areas currently threatened by Iran is unrealistic,” he says. “This would require a very high number of warships and other military assets.”

CaixaBank, in a research note on Wednesday, issued its own warnings about Iran’s attacks and Strait of Hormuz closures. Energy prices will spike as long as the disruption continues, the firm predicts.

“Iran’s response — expanding the radius of the conflict, effectively closing maritime traffic through Hormuz, and threatening critical infrastructure — is causing a short-term escalation of tensions,” the firm stated. “It remains to be seen for how many days this response can be sustained and what approach will be taken by the new leadership core (and, in particular, by Khamenei’s successor).”

Persistent high prices could prompt hawkish European Central Bank and Federal Reserve moves, increasing economic drag, the firm continued.

Transatlantic Talks Turn Tense

The maritime chaos is unfolding alongside a sharp diplomatic rupture with Europe. Trump on Tuesday threatened to “cut off all trade with Spain” after Madrid refused US access to its military bases. He also criticized the UK’s decision to block the use of Diego Garcia in the Indian Ocean.

“This is not the age of Churchill,” Trump said during a White House meeting with European counterparts. “The UK has been very, very uncooperative with that stupid island that they have.”

The remarks underscore mounting friction within NATO and the broader Western alliance at a moment when coordinated action would be critical to stabilizing markets. Instead, the spat adds another layer of uncertainty to global trade flows already strained by inflation and tariff confusion on the heels of the US Supreme Court ruling against Trump.

Many dealmaking plans are also likely on hold, marking a stark contrast to 2025, the second-highest year on record for transaction value.

“The sentiment was that the stars were aligned” for a similar trajectory in 2026, said Kyle Walters, an analyst at PitchBook.

M&A consultancies such as McKinsey & Company and Bain & Co. had projected sustained M&A growth in 2026 due to energy security priorities, sovereign wealth fund firepower, and supportive fiscal reforms.

Then one weekend changed the narrative. As Walters puts it: “Uncertainty is bad for M&A appetite.”

Tariff ambiguity can slow deals. Inflation complicates financing. Armed conflict in a region central to global energy flows is far more destabilizing.

“In periods of uncertainty, buyers take a step back. They’re in wait-and-see mode,” Walters said, adding that domestic M&A has been “flipped on its head.” Cross-border activity is particularly exposed, with capital flight, currency volatility, and political risk creating an “unopportunistic M&A environment.” European firms considering expansion into the Middle East now face heightened scrutiny; “It has to be an A+ transaction to proceed,” Walters said.

Markets Brace For Escalation

What began the year as a story of alignment and acceleration has become one of recalibration — with capital pausing just as geopolitical risk surges.

BMI, a unit of Fitch Solutions, outlined a short-term scenario in which the US coordinates with Israel to overwhelm Iran and minimize retaliation against US assets and the Strait itself.

But even a limited campaign carries economic consequences.

Abigail Hall, a senior fellow at the Independent Institute, warned that energy markets are likely to bear the brunt. “There are already concerns about shipping and other disruptions — particularly around the Strait of Hormuz,” she said, pointing to “knowledge constraints on the part of policymakers and the presence of misaligned incentives.”

Hall also expressed skepticism that the US-led strikes would produce long-term political transformation inside Iran. “You may have ‘cut the head off the snake,’ but neglected the fact that there were many other vipers in the room,” she said.

Military strikes, she explained, often empower the most extreme factions of a country and produce a “rally-around-the-flag” effects whereby an external attack draws the civilian population toward the existing regime.

“In Iran we’ve seen that military escalation, and the domestic dissent it inspires,” she adds. “It often leads to harsher repression and increased regime control.”

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US-Iran talks conclude with claims of progress but few details | Nuclear Weapons News

Tehran, Iran – Another round of indirect talks between Iranian and United States officials ended with a mediator claiming “significant progress” but still no clear evidence that either side was willing to concede enough on their positions to avoid war.

After the conclusion of the talks in Geneva on Thursday, Iranian Foreign Minister Abbas Araghchi said further technical talks would be held next week in Vienna and progress had been “good”.

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“These were the most serious and longest talks,” Araghchi said.

Omani Foreign Minister Badr bin Hamad Al Busaidi, who mediated the talks, said Iranian and US diplomats would consult with their governments before the Vienna talks.

Few details have emerged about the discussions, but Araghchi was reported to have met US envoy Steve Witkoff – if only briefly, according to Iran’s Tasnim news agency.

The Iranian team, led by Araghchi, handed over on Wednesday night Tehran’s written proposals to Al Busaidi, who also mediated previous rounds of talks in Geneva and Muscat.

The Omani diplomat then met with the US delegation on Thursday, led by Witkoff and US President Donald Trump’s son-in-law Jared Kushner. Al Busaidi mediated between the two teams throughout the day, and the US delegation also held separate talks over Ukraine.

Also taking part in the talks was Rafael Grossi, the director general of the International Atomic Energy Agency (IAEA), which will have to undertake nuclear monitoring and verification duties in Iran in case of any agreement.

The UN watchdog will hold several days of board meetings starting on March 6, which is around the 10- to 15-day deadline floated by Trump last week for Iran to reach a deal.

Western media outlets have suggested the board could once again consider a move to censure Iran depending on the results of the Geneva talks. Iran has accused Grossi of taking politicised action and criticised the IAEA after Israel attacked Iran in June, one day after the agency passed a resolution saying Tehran was not complying with its commitment to nuclear safeguards.

Gerald Ford carrier
The US Navy aircraft carrier USS Gerald R Ford departs Souda Bay on the island of Crete on February 26, 2026, for the coast of Israel, leading a second US carrier strike group to take up positions against Iran [Costas Metaxakis/AFP]

Fundamental differences

The two sides have been at odds over key issues, including uranium enrichment and missiles.

Washington has repeatedly emphasised, in lockstep with Israel, that it will not accept any nuclear enrichment taking place on Iranian soil, even at civilian-use levels agreed during the 2015 nuclear deal that Iran agreed with world powers. Trump unilaterally abandoned that deal in 2018.

In the days leading up to the Geneva talks, US officials increasingly focused on Iran’s ballistic missile programme, saying the missiles threaten US military bases across the Middle East as well as Israel. Iran has refused to entertain any talks on its conventional weapons. Iranian officials, including President Masoud Pezeshkian, have repeatedly said they will never develop nuclear weapons.

Speaking to local officials during a provincial visit, Pezeshkian also shot back at Trump’s assertion during a lengthy State of the Union speech that Iran was “the world’s number one sponsor of terror”.

Pezeshkian said numerous Iranian officials and nuclear scientists have been assassinated over the decades, particularly in the immediate aftermath of the country’s 1979 Islamic revolution.

“If the realities are seen fairly, it will become clear that Iran is not only not a supporter of terrorism, but one of the main victims of terror in the region and across the world,” he said.

The Iranian government’s IRNA news agency said Tehran’s proposal was expected to gauge US “seriousness” in the talks because it contained “win-win” offers.

Iranian officials have not publicly discussed all the details of their proposals, but they are believed to include diluting part of the country’s 60-percent enriched uranium and keeping the uranium inside the country. Iranian authorities envisage that could be paired with economic opportunities for the US related to Iranian oil and gas and the purchase of airplanes.

TEHRAN, IRAN - FEBRUARY 21: People are shop at Tajrish bazar in Tehran on February 21, 2026 in Tehran, Iran. In recent weeks, the United States has moved vast numbers of military vessels and aircraft to Europe and the Middle East, heightening speculation that it intended to strike Iran. (Photo by Majid Saeedi/Getty Images)
People shop at Tajrish bazar in Tehran on February 21, 2026 [Majid Saeedi/Getty Images]

Supreme Leader Ali Khamenei has maintained his tough rhetoric against the US as well, casting doubt on the chances of any agreement. He also said Trump would be unable to overthrow Iran’s government after the US president said regime change would be “the best thing that could happen” in Iran.

Araghchi said during an interview on Wednesday that even if Khamenei is killed, the theocratic establishment in Iran would carry on because it has legal procedures in place to appoint a successor. Pezeshkian added on Thursday: “They can eliminate me, eliminate anyone. If they hit us, a hundred more like us will come up to run the country.”

Double-digit inflation as Iran braces for war

Iranian and US officials have been hailing supposed “progress” in the indirect talks this month, but many Iranians continue to prepare for war.

In Tehran and across the country, people are buying bottled water, biscuits, canned foods and other essentials in case of a war.

“A few days ago, I bought a power bank to keep the electronics charged. Now I’m looking for a short-wave radio so we can hear the news if the state shuts down the internet and electricity infrastructure is bombed,” said a 28-year-old resident of the capital who asked not to be named.

As bombs fell during the 12-day war with Israel in June, Iranian authorities cut off almost all internet access for several days, followed in January by an unprecedented 20-day total blackout imposed on about 92 million people as thousands of people were killed during nationwide protests.

The Iranian government, which blames “terrorists” armed and funded by the US and Israel for the protests, has rejected Trump’s claim that 32,000 Iranians were killed during the demonstrations. It said more than 3,000 people were killed, and rejects documentation by the United Nations and international human rights organisations that its security forces were behind the killings.

As the threat of war intensifies, not all Iranians are capable of stocking up on food and other necessities due to rising inflation that has gripped the country for more than a decade as a result of a mix of chronic local mismanagement and US and UN sanctions.

According to separate reports by the Statistical Centre of Iran and the Central Bank of Iran released on Thursday, inflation has now shot beyond 60 percent.

The Statistical Centre put annual inflation in the Iranian month of Bahman, which ended on February 19, at 68.1 percent, while the Central Bank said it was 62.2 percent.

Food inflation was by far the strongest driver at a whopping 105 percent. That included a 207-percent inflation rate for cooking oil, 117 percent for red meat, 108 percent for eggs and dairy products, 113 percent for fruit and 142 percent for bread and corn.

Iran’s national currency, the rial, stood at about 1.66 million rials to the US dollar on Thursday, near an all-time low.

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Oman confirms US-Iran talks will take place in Geneva on Thursday | Politics News

Oman’s Foreign Minister Badr Al Busaidi has confirmed that further talks between the United States and Iran will take place on Thursday amid spiralling tensions between the two countries.

“Pleased to confirm US-Iran negotiations are now set for Geneva this Thursday, with a positive push to go the extra mile towards finalizing the deal,” Albusaidi said in a social media post on Sunday.

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The announcement comes as the US continues to amass military assets in the Middle East, raising concerns about an all-out war against Iran.

Hours before Oman’s announcement, Iran’s Foreign Minister Abbas Araghchi said Tehran was ready to put in place a “full monitoring mechanism” to guarantee the peaceful nature of its nuclear programme and ease tensions.

Asked by Face the Nation moderator Margaret Brennan why Iran would want to pursue enrichment on its soil rather than buy enriched uranium from abroad, given the US military build-up and risk of an escalation, Araghchi said the issue was a matter of “dignity and pride” for Iranians.

“We have developed this technology by ourselves, by our scientists, and it is very dear to us because we have created it – we have paid a huge expense for that,” he said.

Araghchi cited among the costs two decades of US sanctions, the targeted killings of Iranian scientists, and US-Israeli attacks on nuclear facilities in June.

“We’re not going to give [our nuclear programme] up; there is no legal reason to do that while everything is peaceful and safeguarded” by the United Nations nuclear watchdog, the International Atomic Energy Agency (IAEA), Araghchi said.

As a “committed member” of the Non-Proliferation Treaty (NPT), which requires non-nuclear-weapon states not to seek or acquire nuclear weapons, Iran is “ready to cooperate with the agency in full”, Araghchi added.

But he stressed that under the treaty, Tehran also has “every right to enjoy a peaceful nuclear energy, including enrichment”.

“Enrichment is a sensitive part of our negotiations. The American team knows about our position, and we know their position. We have already exchanged our concerns, and I think a solution is achievable,” the minister noted.

Enrichment is the process of isolating and garnering a rare variant, or isotope, of uranium that can produce nuclear fission. At low levels, enriched uranium can power electric plants. If enriched to approximately 90 percent, it can be used for nuclear weapons.

US officials, including President Donald Trump, have previously suggested that Washington is seeking “zero enrichment” by Tehran.

Earlier this month, US Secretary of State Marco Rubio said any deal with Iran would need to include agreements on ballistic missiles and support for its allies in the region.

Araghchi, however, said on Sunday that Iran was “negotiating only nuclear” at the present time.

“There is no other subject,” he told CBS News, adding that he was optimistic that a deal could be reached.

The second round of nuclear talks concluded in Geneva on February 17. The US and Iran also held indirect talks in Oman earlier this month.

The Iranian delegation is working ahead of the meeting to present a draft that includes “elements which can accommodate both sides’ concerns and interests” to reach a “fast deal”, Araghchi said.

The top Iranian diplomat added the agreement would likely be “better” than the Joint Comprehensive Plan of Action (JCPOA), negotiated by former US President Barack Obama in 2015.

“There are elements that could be much better than the previous deal,” he said, without elaborating. “Right now, there is no need for too much detail. But we can agree on our nuclear programme to remain peaceful forever and at the same time, for more sanctions [to be] lifted.”

Some observers were less optimistic about the chances of striking a deal. Trita Parsi, executive vice president of the Quincy Institute, told Al Jazeera that Iran is likely to put forward a proposal that goes beyond anything they ever offered, but even that may not be enough.

“Trump has been sold a narrative by the Israelis that portrays Iran far, far weaker than it actually is. As a result, he’s adopting maximalist capitulation positions that are simply unrealistic based on how the power reality actually looks,” Parsi told Al Jazeera.

“Unless this gets corrected, even if the Iranians put forward a very far-leaning proposal that is extremely attractive to the US, Trump may still say no because he’s under the false belief that he can get something even better.”

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Houthi threats and US-Iran conflict escalate Ramadan fears in Yemen | Conflict News

Sanaa, Yemen – Ahmed Abdu, 28, parked his motorbike near a hall under construction in the al-Jiraf neighbourhood of Sanaa. He walked some metres to deliver a food parcel to a customer.

Nearly a minute later, an air strike hit the hall, setting off a thunderous explosion.

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Fire erupted, and smoke rose on the dark street at night. Passersby screamed and fled in panic. The attack happened last Ramadan, on March 19, 2025, in the Yemeni capital.

Ahmed, who survived, said he will never forget that moment of horror. He escaped unscathed, but his motorbike was charred, and nine civilians sustained injuries.

As Yemen enters this new Ramadan, memories of last year’s United States-led aerial campaign, Operation Rough Rider, are resurfacing in Sanaa.

The two-month operation, which Washington said targeted Houthi military infrastructure, killed at least 224 civilians, many of them in Ramadan last year.

Today, the country remains in tumult amid rising tensions in the region. Ahmed and thousands of people like him fear a repeat of the violence that shattered the holiest month of the year.

“I do not know whether this calm will continue in this Ramadan, or we will relive the intimidating war surprises we endured last year. Such an uncertainty is worrisome,” Ahmed told Al Jazeera.

People gather around girls learning to recite the Holy Quran, ahead of the Muslim fasting month of Ramadan, at the Grand Mosque in Sanaa, Yemen February 3, 2026. REUTERS/Khaled Abdullah
People gather around girls learning to recite the Quran at the Grand Mosque in Sanaa, Yemen [File: Khaled Abdullah/Reuters]

Ready for the second round

About 10 days before this Ramadan, the Houthis, who control northwest Yemen, including Sanaa, staged a mass protest in the capital under the slogan “Steadfast and ready for the next round”, referring to a possible confrontation with local or foreign adversaries.

The protest expressed solidarity with and support for Houthi allies, Iran and Lebanon’s Hezbollah, against the US and Israel. Houthi leaders said their hands were on the trigger and that any US attacks on Iran would prompt them to intervene.

Mohammed al-Bukhaiti, a member of the political bureau of the Houthi movement, warned the US against launching any “military aggression” against Iran, saying that attacking Iran would amount to a full-scale war in the region.

“We are men of action, not words,” al-Bukhaiti told Iranian television.

With the Houthi threats to support Iran militarily against Washington, the fear for many regular Yemenis is that their country could soon find itself a target of US warplanes once again.

epa12751633 People walk through a market ahead of the fasting month of Ramadan in Sana'a, Yemen, 17 February 2026. Ramadan is expected to begin on 18 February 2026, depending on the sighting of the new crescent moon. Muslims around the world celebrate the holy month of Ramadan by praying during the nighttime and abstaining from eating, drinking, and sexual acts during the period between sunrise and sunset. EPA/YAHYA ARHAB
People walk through a market ahead of the fasting month of Ramadan in Sanaa, Yemen, February 17, 2026 [Yahya Arhab/EPA]

The missile in the kitchen

The scars from previous US-Houthi attack exchanges still linger in war-ravaged Yemen.

The US said the strikes last year were carried out in retaliation for Houthi attacks on Israeli-linked vessels passing through the Red Sea, in solidarity with Gaza.

Construction worker Faisal Abdulkareem, 35, welcomes the arrival of Ramadan, but memories of the last one remain painful. He prays this month will pass peacefully without the horror of warplanes, missiles, and explosions.

“On a Ramadan night last year, I was lying in my room, facing the street. I heard the roar of a warplane. I was worried but did not panic. I reassured myself: This is a residential area with no military facilities, and it would not be targeted,” Faisal recalled.

About a minute later, an explosion rocked the area. The aluminium window frames were blown outwards, and shards of glass flew into Faisal’s room.

“The glass fragments struck parts of my body, including my head and hands. I wiped the blood away with a tissue as I tried to process happened. It was terrifying,” he said.

Faisal went outside to see exactly where the rocket had hit. “The missile landed in my neighbour’s kitchen. His house is about 20 metres [66 feet] away from my first-floor apartment. That spiritual Ramadan night turned into a moment of terror,” he told Al Jazeera.

Fortunately, no one was killed or seriously injured. But Faisal’s neighbour’s house sustained damage.

“People in the neighbourhood rushed to the house. Some said it was an American missile. Others suggested the Houthis launched the missile to intercept the US plane over Sanaa, but it fell on the house accidentally.”

Faisal said his neighbour had to bear the financial burden of repairing the damage to his house alone.

“We fasted from food and drink last Ramadan, but not from fear and grief,” Faisal said.

Peace vs solidarity

In a speech on preparations for Ramadan on February 13, Houthi chief Abdel-Malik al-Houthi said Israel and the US have sought to dominate the Middle East.

“This is why [the US and Israel] focus on removing [Iran], because they consider it to be at the forefront of the major obstacles that stand in the way of achieving that goal,” he added.

Such a goal is unacceptable, he said. “This is something that no human being with even a shred of humanity or human dignity left can accept.”

While the Houthi leader views engaging in the war as a duty, others consider it “unfair” to risk peace in Sanaa for the sake of solidarity with Iran.

Ammar Ahmed, a law student in Sanaa, keeps abreast of the regional news and views the US-Iran military clash as catastrophic for northern Yemen.

“The Houthi leadership is defiant, and it will not hesitate to hit American military assets in the region. So, we [civilians in northern Yemen] will again face US strikes,” said Ammar.

He argued that peace in Yemen should be prioritised over solidarity with Iran.

“Iran is a powerful country, and it can defend its interests. Even if the Houthis intervened, their missiles or drones would not cripple the US military. They will only bring us trouble,” Ammar told Al Jazeera.

Legitimate concerns

The future of Yemen’s Houthis is tied to Iran, and civilian worry over what lies ahead during Ramadan and in the months following is legitimate, Abulsalam Mohammed, the head of the Yemeni Abaad Studies and Research Center, told Al Jazeera.

“A war against the Houthis in northern Yemen remains an option [for anti-Houthi forces]. This option will be scrapped should the group come to talks and recognise the legitimacy of the UN-recognised Yemeni government,” said Mohammed.

He indicated that Houthi involvement in any US-Iran military conflict would only accelerate the launch of anti-Houthi operations by Saudi Arabia and the Yemeni government in Yemen’s north.

The Yemeni government has been emboldened by a recent campaign against the separatist Southern Transitional Council, forcing them out of much of southern Yemen with the backing of Saudi Arabia.

“The coming military operations against the rebel group, in my view, will not be limited to air strikes. There will be advances by local ground forces, coupled with foreign aerial cover. We witnessed how the separatists collapsed in the north, and the fall of the Houthis in the north is also possible,” Mohammed said.

The United Nations’s special envoy to Yemen, Hans Grundberg, warned that stabilisation in any part of the country will not be durable if the broader conflict in Yemen is not addressed comprehensively.

“It is high time to take decisive steps in this regard. Without a wider negotiated political settlement to the conflict, gains will continue to remain vulnerable to reversal,” said Grundberg in a briefing delivered to the UN Security Council on February 12.

For Sanaa resident Ahmed Abdu, it does not matter who wins any future conflict in the country. His priority is staying safe from the direct consequences of hostilities.

“During Ramadan last year, I lost my source of income, the motorbike, in an air strike. That loss could be replaced. I only wish a peaceful Ramadan this year and a lasting end to the war,” said Ahmed.

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