Iran declares the Strait of Hormuz closed

Iran declared the Strait of Hormuz closed. The US struck back within hours. Ships still move through the waterway. None of these facts settles the question that matters for European commerce: whether the captains, insurers, banks and flag states that make shipping work still treat the route as normal.

On July 12, Iran's Revolutionary Guard Corps attacked a Cyprus-flagged container ship, the M/V GFS Galaxy (Straits Times/Reuters). Tehran then declared the strait closed for the fourth time since June. Each cycle of declaration, attack and partial reopening has made insurers and operators more cautious.

The declaration itself carries no legal weight. UNCLOS (the UN law governing ocean use) prohibits coastal states from blocking transit through international straits (UNCLOS Part III). Iran's leverage targets a different system entirely.

The Three Gates That Keep a Shipping Lane Alive

A shipping lane dies commercially before it dies physically. Three systems must function for a vessel to sail: a maritime warning channel used by commercial operators must assess navigation as safe, insurers must offer affordable war-risk coverage, and banks must clear payment without sanctions contamination.

All three are under strain. The US-backed maritime warning system that commercial shippers rely on, the Joint Maritime Information Center, has directed vessels toward an expanded southern route and classified the Hormuz threat as severe (Mint). War-risk insurance briefly spiked to 10% of ship value before easing to around 1–3%, with pricing sometimes set only hours before departure (CNN). Premiums remain elevated even after partial traffic recovery (Insurance Asia).

Then comes the sanctions trap. Iran demands ships use an Iranian-approved route. The US Treasury has warned that payments or guarantees for safe passage involving IRGC-linked entities trigger sanctions exposure (OFAC). A shipper that follows an Iranian channel may create sanctions liability. A shipper that ignores it faces higher physical and insurance risk. The three gates pull in different directions.

Europe May Avoid Shortages and Still Pay More

Europe's direct dependence on Hormuz is lower than crisis coverage implies. Spain says only about 5% of its oil and 2% of its gas passes through the strait, backed by more than 90 days of reserves (El País, Infobae/EFE). Poland's gas-import capacity now sits 63% above consumption after years of replacing Russian supplies (Business Insider Polska).

But Hormuz handles an estimated 20–25% of global oil trade in peacetime (HVG 360). When that flow is threatened, benchmarks move and European pump prices follow. Hungary's diesel benchmark jumped nearly 13% in one session while crude rose about 6% (Telex/G7). The European Commission has acknowledged that price escalation, not physical supply, is its main concern (El Periódico de la Energía). IEA chief Fatih Birol was blunter: it would be "a grave error" for Europe to think it was already safe (Euronews).

Who Decides Whether Ships Actually Sail

France and Britain have staked out the clearest European military posture: defend navigation, anchor the effort through Oman, stay clear of Washington's strike campaign (French communiqué). NATO allies have discussed Hormuz with Gulf states, but deployment would require a new political decision (NATO, Reuters/KFGO). The EU has a defensive Red Sea mission, Aspides. It protects merchant ships; it was not designed to fight a state navy (Council Decision 2024/583).

But escort missions do not settle the commercial question. Malta, one of Europe's largest ship registries, has produced no detectable public guidance to its fleet despite severe threat classifications. Under UNCLOS, Malta must supervise ships flying its flag. That silence reveals where the real decisions happen: underwriters pricing war-risk premiums, compliance officers screening payments, and registry administrators assessing liability. These are the people who determine whether European-linked ships actually sail.

The route is open. Making it commercially usable again requires flag states, insurers and banks to say what conditions they need. So far, none of them have.