The collapse of the temporary ceasefire has triggered a sharp deterioration in the Strait of Hormuz, disrupting shipping and accelerating changes in global energy trade.
Commercial traffic through the Strait of Hormuz deteriorates sharply
The situation in the Strait of Hormuz has worsened dramatically after commercial shipping fell to a minimum and the United States revoked temporary oil waivers granted to Iran. The renewed escalation has once again disrupted one of the world’s most strategic maritime corridors, forcing energy markets to reassess global supply routes.
Traffic through the strait has nearly ground to a halt once again. The United States launched military strikes against Iran for a second consecutive day, while Tehran responded by targeting sites in Kuwait and Bahrain. The latest exchange followed attacks on three commercial vessels attempting to transit the waterway and came only hours after President Donald Trump declared that the temporary ceasefire agreed with Tehran in June was effectively over.
This week, Washington also withdrew the temporary exemptions that had allowed Iranian oil sales under the memorandum of understanding. According to analysts at ING, “although the revocation does not fundamentally alter oil market dynamics, it was significant from a market sentiment perspective.” The move had already fuelled expectations that the agreement was on the verge of collapse.
According to Bloomberg, only a handful of vessels have managed to pass through the strait in recent days. Among the largest ships observed were a US-sanctioned supertanker and an Iranian-flagged container vessel. On Wednesday, 8 July, only 14 merchant ships reportedly crossed the waterway in both directions, the lowest level recorded since the temporary agreement reached in mid-June.
These developments mark a clear deterioration compared with recent weeks. Following the fragile agreement between the United States and Iran to reopen the Strait of Hormuz, shipping had gradually resumed despite persistent maritime security risks. As with many energy-importing regions, including parts of Africa that rely on stable global fuel markets, renewed disruption in Hormuz increases uncertainty across international supply chains.
Ambiguity in the temporary agreement
The temporary agreement signed by Trump had initially allowed shipping activity to recover. However, it left major uncertainties over how transit through the Strait of Hormuz would be managed, particularly regarding navigation rights and possible transit charges.
The memorandum stated that Iran would “use its best efforts” to ensure the safe passage of commercial vessels for a period of 60 days without imposing any charges.
According to Reuters, citing diplomatic sources, Iranian negotiators interpreted this wording as implicit US recognition of Iran’s authority over the Strait of Hormuz, even without collecting fees during the initial two-month period while negotiating a broader agreement. The United States and its Gulf allies, however, viewed the text differently, arguing that it merely required Iran to facilitate safe navigation without restricting commercial shipping.
Control of Hormuz takes priority over Iran’s nuclear programme
For Tehran, securing US acknowledgement of Iranian control over the Strait of Hormuz has become an even higher priority than negotiations over its nuclear programme, an issue that has defined relations between Iran and the United States for nearly 25 years.
Iran’s nuclear activities have long been the main justification for international sanctions and were also cited as the primary reason behind Trump’s military campaign. Nevertheless, nuclear negotiations were pushed to the background during talks aimed at securing the temporary ceasefire, with both sides postponing the issue to future discussions.
Confidence in the Strait of Hormuz has collapsed
Writing for Foreign Policy, International Energy Agency Executive Director Fatih Birol argued that confidence in the Strait of Hormuz has effectively collapsed. He described trust itself as one of the most valuable commodities in today’s global energy market, warning that geopolitical risks are rapidly reshaping global energy flows.
Middle Eastern oil producers have already begun accelerating plans to diversify export routes that bypass the Strait of Hormuz. The United Arab Emirates, for example, is speeding up construction of a second pipeline linking oil production to the port of Fujairah on the southern side of the strait. Other Gulf producers are also considering alternative strategies, including expanding crude storage capacity in importing countries to reduce dependence on the corridor.
Outside the Middle East, governments are likewise seeking greater access to alternative export and import routes. These shifts are also relevant for African economies pursuing greater energy security through diversified supply chains and increased domestic renewable energy production.
Capital shifts towards domestic energy sources
Since 2021, Birol noted, energy-importing countries have significantly redirected capital investment towards domestic energy sources. This trend is driving stronger demand for renewable energy, electric vehicles and battery technologies, while in some markets it has also supported greater coal use.
The impact of geopolitical tensions extends well beyond oil and natural gas. Last year, China also leveraged its dominant position in rare earth supplies as a geopolitical tool.
The global energy system is adapting to repeated disruptions, and the strategic weight of the Strait of Hormuz may never return to its previous level. Tehran has demonstrated that maintaining a sufficient degree of instability is enough to force traders and shipping companies to permanently price geopolitical risk into oil markets.
As Birol concluded, rather than simply choosing the lowest-cost supplier, governments and businesses will increasingly assign geopolitical risk premiums to supplies moving through routes that were once considered secure. Price alone will no longer determine purchasing decisions. Predictability will become just as important. The remaining question is how long Iran will consider continued pressure on the Strait of Hormuz to be in its strategic interest.
