Hormuz LNG Traffic Falls Sharply

The Strait of Hormuz has not been formally closed. That is the important legal fact. The commercial fact is different: ships are starting to behave as if the route cannot be relied on.

In a matter of days, Brent crude moved from roughly $70 to $79-80 a barrel (Süddeutsche Zeitung). LNG carrier transits through Hormuz fell from 13 in one week to just two (Lloyd's List). More than 30% of global seaborne crude passes through the narrow channel between Iran and Oman. You do not need a formal blockade for that to matter. You need enough risk for shipowners, insurers, banks and charterers to decide the voyage is not worth it.

On July 8th, Trump declared the 60-day US-Iran deal dead and Washington revoked Iran's temporary oil-sales waiver after further tanker attacks. US Central Command launched new strikes on Iranian targets, which Nato's Mark Rutte called "absolutely necessary".

The memorandum signed on June 17th was meant to create space for sanctions and nuclear talks. It did not create the conditions that shipping needs: safe passage, insurance at a price that makes sense, and banks willing to touch the transaction. A deconfliction hotline agreed in Switzerland went untested.

On June 25th, the Singapore-flagged Ever Lovely was hit near Oman. The US struck Iranian coastal targets the following day. Iran retaliated against Gulf bases on June 27th. With each exchange, the space between ceasefire and open conflict narrowed. For Europe, the test is not what either side says about Hormuz. It is whether commerce treats the passage as normal. It does not.

How the Price Lands

Europe buys less crude directly from the Gulf than the headlines often imply. Germany sourced 6.1% of its crude from the Middle East in 2025 (Destatis). Spain's share was 5.5% in May 2026 (Europa Press). Ireland's exposure is mostly through price rather than direct supply. Brent is a global benchmark, so when Hormuz becomes risky, the cost travels through refineries, hauliers, airlines, farms and household bills regardless of where the physical barrel began.

Gas moves even faster. German spot gas reached €45.2/MWh, up from around €30/MWh at the start of the year (BDEW). Gas-price volatility had already added €13 billion to the EU wholesale electricity bill by mid-April (EEA). For Irish readers, the memory is recent enough: once gas sets the marginal price of power, a shock in one part of the system can turn up quickly in electricity costs.

Italy shows the cost of substitution. Its terminals received 113 LNG cargoes in the first half of 2026, 70 from the United States (MarketScreener), after Qatari supply collapsed. According to Prima Pagina News, QatarEnergy declared force majeure, meaning it says the disruption is beyond its control, on deliveries to Italian utility Edison, cancelling 21 cargoes since April. Every replacement cargo bought on the spot market comes at a higher price.

Spain has already turned the shock into fiscal policy. Madrid's fuel-tax support begins at 15 cents per litre in July, with the package costing more than €1.825 billion (Hacienda, Agencia Tributaria). Such measures soften the blow at home. They do not persuade ships to sail.

Who Controls What

The hierarchy of power is fairly clear. The US can tighten or ease OFAC sanctions on Iran by executive action much faster than Europe can organise a naval escort. Navies can reduce the physical danger: France and the UK secured Oman's agreement on July 3rd to help patrol its waters, and a multinational mine-clearance mission involving around 30 states is moving forward. Italy's Meloni said Rome would not join strikes but could contribute on Hormuz in forms authorised by its parliament (Il Fatto Quotidiano).

Yet navies and diplomats are not the final arbiters of whether trade resumes. Insurers and banks are. To normalise the route, laden tankers would need to pass safely for weeks, long enough for war-risk premiums to fall. Banks would need to process Gulf-linked trade without fearing US sanctions exposure. Neither condition is near. Lloyd's List reports that Hormuz is already producing charterparty and marine-insurance disputes that could take months to resolve.

The ECB has warned that a persistent Middle East energy shock would raise inflation and lower growth. EU member states are required to hold emergency oil stocks under Directive 2009/119/EC, the law mandating 90 days of reserves. But central banks cannot reopen sea lanes, and stockpiles buy time rather than normality. Europe is paying the premium for a strait that remains politically open and commercially unreliable.