Hormuz traffic is back at crisis lows, the Houthis have opened a second front against Saudi shipping, and new US duties landed the same week. Yet spot rates just fell. Here is why, and what it means for your cost base.
The Strait of Hormuz has been effectively contested since February 28, when Iran began warning off, boarding, and attacking merchant traffic and laying mines. The Islamabad MOU signed June 17 was supposed to end that: 60 days of toll-free transit, mine clearance within 30 days, a proportional lifting of the US blockade. It broke down within weeks over the transit-corridor question, and fighting resumed in July.
The operational picture now is worse than the headline numbers suggest, because so much of it is invisible. Lloyd’s List Intelligence recorded 39 transits during July 20–26, down from 82 the prior week. Of the 22 non-Iranian-linked transits, 21 ran dark. Roughly 70% of all traffic was untraceable via AIS. Vessels are also declining to use Iran’s prescribed corridor, hugging the Omani coast on the southern route instead.
Only seven non-Iranian vessels entered the Gulf that week, three product tankers, three crude tankers and one bulker, against fifteen that exited. US Central Command is maintaining its blockade of Iranian ports and reports 18 merchant ships redirected and two disabled.
The commercial consequence is an insurance market that prices most Gulf voyages out of existence. War risk quotes have returned to 7.5%–10% of hull value, against roughly 0.25% before the war. On a $100 million tanker, that is the difference between a $250,000 premium and a $7.5–10 million one.
Two structural effects are worth flagging for anyone modelling Gulf exposure. Chinese and Indian owners are reportedly securing better terms through regional insurance markets, letting them stay in trades that Western owners have abandoned. And non-sanctioned shadow-fleet tonnage is moving into compliant Gulf cargoes. Nearly 30 tankers and LPG carriers have flipped out of shadow service since the conflict began. Counterparty and vetting risk in the Gulf is materially different than it was six months ago.
Red Sea: a second front, aimed at crude
On July 20, the Houthis declared a maritime ban on Saudi Arabia. It was retaliation, they said, for the blockade of Yemen and a strike on Sanaa airport. Vessels calling at Saudi terminals were warned they could be targeted anywhere within reach.
The logic connects directly to Hormuz. Yanbu, on Saudi Arabia’s Red Sea coast, is the kingdom’s relief valve for exports it cannot move through a constrained Gulf. Bab el Mandeb oil flows averaged 7.4 million barrels per day in June, up from 4.2 million a year earlier, precisely because Hormuz was compromised. The ban targets the workaround.
It is working on crude. Only one crude tanker has been tracked calling at a Saudi Red Sea port since July 23. On July 27, eleven ballast crude tankers switched off AIS off or approaching Yanbu. China’s largest state-owned tanker operators are pulling VLCCs out of Red Sea trade. Traceable calls at Saudi Red Sea ports have fallen to near zero from a pre-ban average of thirteen a day.
Container shipping, so far, is holding. Eighteen container lines sent vessels through Bab el Mandeb between July 21 and 27, and Maersk continues to run trans-Suez services. Total transits fell to 263 from 354 week on week, but a meaningful share of that is AIS shutdowns rather than genuine diversion.
The historical parallel Lloyd’s draws is instructive. The seizure of the Galaxy Leader in November 2023 did not trigger mass rerouting; large-scale diversion around the Cape only came once attacks looked indiscriminate and operators concluded all shipping was exposed. Bab el Mandeb has never fully closed. Even at the worst of 2024, traffic fell about 60% rather than stopping. The trigger to watch is not attack frequency but target selection. If Houthi targeting broadens beyond Saudi-linked tonnage, box carriers will move quickly.
Rates: a rising floor under a falling ceiling
The counterintuitive part. Drewry’s World Container Index fell 3% to $4,255 per 40ft container on July 30, with declines on both Asia–Europe and transpacific. That is down from $4,639 earlier in the month, which had been the highest reading since September 2024 and roughly 61% above a year prior.
Two forces are pulling in opposite directions, and right now demand is winning.
Pushing costs up: bunker prices remain dislocated. The G20-VLSFO index sat at a 25.8% premium to Brent in late June, against a 1% discount in February, and Fujairah has carried a punishing premium to Singapore and Houston. Fuel can be 60% of a boxship’s voyage cost. Add war risk, longer routings and slower rotations.
Pulling volumes down: the East–West market has softened since the new US Section 301 forced-labor duties took effect July 24, layering 10%–12.5% onto goods from 60 trading partners covering 99.4% of US imports. Front-loading ahead of that deadline pulled volume into Q2.
Carriers are responding on both margins. Emergency fuel surcharges returned August 1, with CMA CGM at $150 per TEU for dry and $165 for reefer on long-haul services and MSC following. Capacity is being withdrawn too: 58 blank sailings are scheduled across the major East–West trades between week 32 and week 36, out of 723 planned departures.
For shippers, the practical read is that headline spot softness is not a saving. The gap is being recovered through surcharges that sit outside the base rate, and through capacity management that tightens space precisely when you need it. Landed cost per unit is rising even where the freight index falls.
Neither chokepoint is closed. Both are expensive, thin and reversible on short notice. The tariff layer, by contrast, is scheduled to sit there for up to four years unless a court removes it. Plan the freight exposure as volatile and the duty exposure as structural.
Sources: Lloyd’s List Intelligence, Strait of Hormuz Brief (July 29, 2026) and Red Sea Brief (July 30, 2026); Drewry World Container Index (July 30, 2026); CMA CGM and MSC surcharge advisories; Ship & Bunker; Al Jazeera (Aug. 2, 2026); Bloomberg (Aug. 3, 2026); USTR Section 301 final action (July 23, 2026); The National; CGTN; US News.