What did Iran announce about the Strait of Hormuz on 25 June?

Iran's Islamic Revolutionary Guard Corps (IRGC) Navy and the Persian Gulf Strait Authority announced that all foreign vessels must now follow specific navigation routes designated by Tehran when passing through the Strait of Hormuz. Ships must also obtain passage permits from Iranian authorities and carry Iran-approved insurance before entering the waterway. Alternative routes have been declared strictly prohibited.

Why does the Strait of Hormuz matter so much to global oil markets?

The Strait of Hormuz is a roughly 21-mile-wide passage between Iran and Oman that connects the Persian Gulf to the open ocean. Approximately 20% of the world's oil supply flows through it, with Saudi Arabia, Iraq, Kuwait, the UAE, and Qatar all depending on this corridor to export their crude oil. Any disruption — real or perceived — has the potential to move energy prices globally.

How do Iran's new Strait of Hormuz rules change the risk profile for shipping companies?

The mandated routes push foreign vessels closer to Iran's shores near Larak Island, effectively replacing the internationally recognised Traffic Separation Scheme with Iran-controlled corridors. Navigating closer to Iranian military assets increases operational risk for shipping companies, which is expected to translate directly into higher war-risk and marine insurance premiums for vessels transiting the region.

How will Iran's Strait of Hormuz regulations affect oil prices and consumers?

Higher insurance costs for vessels operating in the strait are expected to be passed along the supply chain — from shipping companies to oil buyers and ultimately to end consumers. If compliance costs rise significantly or shipping companies avoid the route altogether, reduced oil flow through the strait could tighten global supply and push crude prices higher. This is a potential scenario, not guaranteed.

What is the Traffic Separation Scheme and why does abandoning it matter?

The Traffic Separation Scheme is an internationally recognised system of designated maritime lanes designed to reduce collision risk and organise vessel traffic in busy or narrow waterways. Iran's new regulations effectively replace this system with its own mandated corridors, removing a neutral, multilaterally agreed safety framework and substituting it with routes controlled by a single nation's military authority.

Image for illustrative purposes only. Not a real photo.

Hormuz shipping curbs shake oil and energy markets

Written by Jon CuthbertPublished Jun 28, 2026, 9:22 AM

Iran's Islamic Revolutionary Guard Corps (IRGC) Navy, alongside the Persian Gulf Strait Authority, announced on 25 June that all foreign vessels must now follow specific navigation routes designated by Tehran when passing through the Strait of Hormuz.
Foreign vessels are now required to obtain passage permits from Iranian authorities before entering the strait, and must carry Iran-approved insurance to navigate the waterway.
The mandated routes push vessels closer to Iran's shores near Larak Island, effectively abandoning the internationally recognised Traffic Separation Scheme — a system of maritime lanes designed to reduce collision risk.

Alternative routes through the strait have been described by Iran as "strictly prohibited."

Iranian Deputy Foreign Minister Kazem Gharibabadi stated that the safety of maritime passage cannot be assured without compliance with Iran's coordination protocols.

The directives were reportedly issued in response to a recent attack on a vessel in the strait, though Iran had previously raised concerns about what it described as uncoordinated shipping routes.

The Strait of Hormuz is a roughly 21-mile-wide passage between Iran and Oman connecting the Persian Gulf to the Gulf of Oman and the open ocean.

Approximately 20% of the world's oil supply passes through the strait, with Saudi Arabia, Iraq, Kuwait, the UAE, and Qatar all dependent on the corridor to export their crude oil.

The new regulations arrive amid fragile US-Iran diplomatic negotiations, adding complexity to an already delicate geopolitical situation.

The most immediate market impact is expected to materialise in higher insurance premiums for vessels operating in the region, as ships are now required to navigate closer to Iranian military assets under government-mandated corridors.

Elevated insurance costs are expected to be passed along the supply chain from shipping companies to oil buyers and ultimately to consumers, with potential knock-on effects across energy markets, commodities, and equities.