The Strait of Hormuz is experiencing sharply reduced commercial shipping activity as insurers withdraw coverage and vessels delay passage following recent escalations in the Gulf region, according to shipping advisory firm OIA Global and legal analysis from Gibson Dunn.
The disruption follows coordinated U.S.-Israeli strikes on Iranian targets on February 28, 2026, and Iran’s subsequent retaliatory strikes against multiple Gulf states. Iran’s Revolutionary Guard Corps has declared the Strait of Hormuz closed, warning vessels against transit. Multiple tankers have reportedly been damaged, and dozens of vessels are diverting or awaiting clearance, Gibson Dunn reported in a client alert issued March 4, 2026.
The crisis is placing significant strain on global logistics and supply chains, with rising tensions focused on strategic maritime chokepoints. DHL has warned customers of longer transit times, elevated insurance premiums, and higher fuel costs. Maersk, one of the world’s largest container lines, temporarily suspended fresh cargo bookings to and from several Gulf states – including the United Arab Emirates, Oman, Iraq, Kuwait, Qatar, Bahrain, and parts of Saudi Arabia – effective March 4, 2026, with exceptions for essential goods like food and medicine. Ports including Jeddah, King Abdullah, and Salalah remain operational, Maersk advised, suggesting customers explore alternative routings or inland gateways.
Other major carriers, including Hapag-Lloyd, CMA CGM, and COSCO, have referenced increased insurance premiums and potential war-risk surcharges in affected regions, reflecting a broader risk environment. Data from container visibility specialist Vizion indicates a significant market reaction, particularly impacting ports in the Arabian Gulf east of the Strait of Hormuz.
For businesses operating under contracts governed by English law, the situation presents complex legal challenges. The doctrine of frustration – excusing contractual performance due to unforeseen circumstances – is unlikely to apply unless performance becomes impossible, illegal, or radically different from what was originally envisioned. Mere hardship or increased expense are insufficient grounds for frustration, and the threshold for its application is high.
Force majeure clauses, but, offer a potential avenue for relief, but their scope depends entirely on the specific wording of the contract. Businesses should urgently review their contracts to determine if force majeure provisions are engaged, considering whether the current situation falls within covered events like “war,” “armed conflict,” or “government action,” or within broader “beyond reasonable control” language. They must also assess whether the clause requires notice to the other party before it can be relied upon.
Beyond contractual considerations, businesses face significant disruption to shipping routes, energy supplies, and broader supply chains. Where contracts contain liquidated damages or time-of-the-essence provisions, parties may face liability for delays attributable to the conflict. Proactive engagement with counterparties, including exploring contractual variation or standstill agreements, is advisable.
Insurance coverage is also under scrutiny. Standard policies frequently contain war exclusions, potentially limiting cover for losses arising from the conflict. War risk premiums have risen sharply in the marine and aviation sectors, and insurers may impose additional exclusions or restrict coverage. Businesses should review their policies urgently and consider supplemental war risk or political risk insurance. The crisis is also heightening credit risk, potentially leading to customer insolvencies and trade credit insurance adjustments. Geopolitical crises frequently trigger a surge in cyberattacks, and cyber policies may contain war-related exclusions.
Businesses operating in the Middle East, or with exposure to the region, are advised to conduct a comprehensive review of all contracts, ensure compliance with notice requirements, engage with counterparties, monitor the sanctions landscape, review insurance coverage, strengthen cyber resilience, and promptly notify insurers of any claims.
