Iran Closes Hormuz After Ship Attack

Iran has declared the Strait of Hormuz closed. The US hit back within hours. Ships are still moving through the waterway. For European trade, including Malta's shipping and bunkering ecosystem, the real question is not whether the sea is physically blocked. It is whether captains, insurers, banks and flag states still treat the route as usable.

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

The declaration has no legal force. UNCLOS, the UN convention governing the use of the seas, does not allow coastal states to block transit through international straits (UNCLOS Part III). Iran's pressure works elsewhere: not on the law of the sea, but on the commercial machinery that makes shipping possible.

The Three Gates That Keep a Shipping Lane Alive

A shipping lane can fail commercially before it is shut physically. Three things have to work for a vessel to sail: the maritime warning system used by commercial operators must judge navigation safe enough, insurers must offer war-risk cover at a price owners can absorb, and banks must clear payments without creating sanctions exposure.

All three are now under pressure. The US-backed Joint Maritime Information Center, used by commercial shippers, has directed vessels towards an expanded southern route and classified the Hormuz threat as severe (Mint). War-risk insurance briefly rose to 10% of ship value before easing to around 1-3%, with prices in some cases fixed only hours before departure (CNN). Premiums remain high even after traffic partly recovered (Insurance Asia).

Then comes the sanctions problem. Iran is demanding that ships use an Iranian-approved route. The US Treasury has warned that payments or guarantees for safe passage involving IRGC-linked entities can trigger sanctions exposure (OFAC). A shipper that follows Iran's channel may create a compliance problem. A shipper that ignores it may face higher physical and insurance risk. The three gates are no longer aligned.

Europe May Avoid Shortages and Still Pay More

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

That does not mean Europe is insulated. Hormuz handles an estimated 20-25% of global oil trade in normal times (HVG 360). When that flow looks vulnerable, benchmark prices move and fuel prices follow. Hungary's diesel benchmark rose nearly 13% in one session while crude rose about 6% (Telex/G7). The European Commission has acknowledged that its main concern is price escalation rather than physical shortages (El Periódico de la Energía). IEA chief Fatih Birol put it more directly: it would be "a grave error" for Europe to think it was already safe (Euronews).

For Malta, the effect would be felt less through empty pumps than through cost. Fuel prices, freight rates, insurance premiums and shipping decisions all feed into an island economy that imports almost everything and sells itself as a serious maritime jurisdiction.

Who Decides Whether Ships Actually Sail

France and Britain have taken the clearest European military position: defend navigation, anchor the effort through Oman, and stay outside Washington's strike campaign (French communiqué). NATO allies have discussed Hormuz with Gulf states, but any deployment would need a fresh political decision (NATO, Reuters/KFGO). The EU already has Aspides, its defensive Red Sea mission. It protects merchant ships; it was not built to fight a state navy (Council Decision 2024/583).

Escort missions still do not answer 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 points to where the practical decisions are being made: by underwriters setting war-risk premiums, compliance officers checking payments, and registry administrators weighing liability. They decide whether European-linked ships actually sail.

The route remains open. To make it commercially usable again, flag states, insurers and banks need to state what conditions they require. So far, they have not.