Hormuz Strait Tensions: What It Means for UAE Shipping in 2025

The Strait of Hormuz — the narrow waterway separating the UAE and Oman from Iran — handles roughly 20% of the world's traded oil and a significant share of global LNG exports. When tensions rise in this corridor, the ripple effects are felt immediately across freight rates, insurance premiums, and supply chain planning throughout the region.

As of mid-2025, the strait remains a focal point of geopolitical friction, and businesses trading through UAE ports need a clear picture of current conditions, near-term risks, and practical mitigation strategies.

The past 18 months have seen a notable increase in maritime security incidents in and around the Strait of Hormuz and the broader Arabian Gulf. These include:

• Vessel seizures and detentions by Iranian naval forces, primarily targeting tankers with perceived links to sanctioned entities
• Drone and missile activity in the Red Sea and Gulf of Aden (Houthi operations), which has pushed additional traffic toward the Gulf route — increasing congestion at Hormuz
• Heightened naval presence from US, UK, and European coalition forces conducting freedom-of-navigation operations
• Insurance war-risk zone designations covering large portions of the Gulf, driving up hull and cargo insurance costs significantly

Importantly, commercial shipping has continued to flow through the strait — a complete closure remains unlikely given the economic consequences for all parties, including Iran. However, the elevated threat environment has materially changed the cost and complexity of transiting the waterway.

Both of the UAE's major container ports have seen operational adjustments in response to the security environment:

Increased dwell times: Vessels calling at Khalifa Port and Jebel Ali are spending longer at anchor awaiting berth windows, partly due to rerouted traffic from the Red Sea crisis adding volume to Gulf ports.

Freight rate pressure: Spot rates on key UAE trade lanes — particularly Asia–Gulf and Europe–Gulf — have remained elevated compared to pre-2024 baselines. Carriers have introduced Gulf surcharges and war-risk premiums that are being passed through to shippers.

Vessel routing changes: Some carriers have adjusted their Gulf loops, reducing port calls or consolidating services to manage risk exposure. This has affected schedule reliability and transit times on certain trade lanes.

For energy-related cargo — crude oil, refined products, LNG, and petrochemicals — the impact has been more acute. War-risk insurance premiums for tankers transiting the strait have increased by an estimated 300–500% compared to 2022 levels, according to Lloyd's market data. This cost is ultimately absorbed by cargo owners and end consumers.

UAE-based traders and energy companies have responded by:

• Locking in longer-term freight contracts to hedge against spot rate volatility
• Diversifying vessel operators to reduce single-counterparty exposure
• Increasing buffer stock levels to absorb potential transit delays

Shippers importing goods into the UAE from Asia or Europe should plan for 3–7 additional days of buffer in their supply chain timelines. Vessel bunching at the strait, combined with increased inspection and documentation requirements, has extended transit predictability windows.

The combination of elevated base freight rates, war-risk surcharges, and higher marine insurance premiums means landed costs for imported goods have risen. For high-volume importers, this can represent a meaningful increase in total supply chain cost — particularly for commodities with thin margins.

Dubai's Jebel Ali remains the dominant transshipment hub for the broader Middle East, South Asia, and East Africa region. While the security environment has created headwinds, the port's scale and connectivity have also made it a beneficiary of traffic diverted away from Red Sea ports. Net throughput at Jebel Ali has remained resilient, though the mix of cargo and trade lanes has shifted.

The near-term outlook is cautious. Diplomatic negotiations between the US and Iran over nuclear and sanctions issues are ongoing, but a durable resolution that materially reduces maritime risk in the Gulf is not expected within this window. Key variables to watch:

• US–Iran diplomatic progress: Any breakthrough could rapidly reduce war-risk premiums and ease vessel routing constraints
• Houthi ceasefire durability: A sustained halt to Red Sea attacks would redirect some traffic back to the Suez route, relieving congestion pressure on Gulf ports
• Carrier capacity decisions: If major lines reduce Gulf capacity in response to risk, spot rates could spike further on short notice

Our assessment: Freight rates and insurance premiums are likely to remain elevated through Q3 2025. Shippers should budget for current surcharge levels and avoid assuming a rapid return to 2022 cost baselines.

The medium-term picture is more nuanced. Several factors could shift conditions significantly:

Scenario A — De-escalation: A diplomatic agreement reducing sanctions pressure on Iran, combined with a durable Red Sea ceasefire, would likely see war-risk premiums fall sharply and freight rates normalise. UAE ports would benefit from restored trade flows and improved schedule reliability.

Scenario B — Sustained tension: If the current security environment persists, we expect further investment in alternative routing infrastructure (including expanded UAE–Oman overland corridors), greater adoption of long-term freight contracts, and continued growth in UAE strategic stockpiling.

Scenario C — Escalation: A significant incident — such as a major vessel seizure or military confrontation — could trigger temporary strait disruption. While a full closure remains a tail risk, even a 48–72 hour disruption would have severe short-term consequences for energy markets and regional supply chains.

Most analysts currently assign the highest probability to Scenario B, with Scenario A as an upside case and Scenario C as a low-probability but high-impact risk.

Given the current environment, here is what businesses trading through UAE ports should be doing now:

1. Review your marine insurance coverage Ensure your cargo insurance explicitly covers war-risk and confirm the geographic scope of your policy. Many standard marine policies exclude war-risk zones — a separate endorsement is typically required.

2. Build lead time buffers into your supply chain Add 5–10 days of buffer to inbound shipment planning for cargo transiting the Gulf. Communicate revised timelines to your customers and internal stakeholders proactively.

3. Engage your freight forwarder on routing options For non-time-sensitive cargo, alternative routing via Oman's Salalah port or overland UAE–Oman corridors may offer cost or risk advantages. Ask your logistics partner to model the options.

4. Consider forward freight rate hedging If you have predictable import or export volumes, locking in freight rates through forward contracts or long-term carrier agreements can provide cost certainty in a volatile market.

5. Diversify your carrier base Relying on a single carrier for Gulf trade lanes increases your exposure to schedule disruptions. Working with two or three carriers on key lanes provides flexibility when one service is affected.

As an Abu Dhabi-based freight forwarder with deep expertise in Gulf maritime operations, Kavalier Logistics monitors conditions at the Strait of Hormuz and UAE ports on a daily basis. We provide our clients with:

• Real-time shipment visibility and proactive exception management
• Routing optimisation across ocean, air, and overland options
• Marine insurance coordination including war-risk coverage
• Customs clearance at Khalifa Port, Jebel Ali, and all UAE entry points
• Project cargo and OOG handling for complex shipments requiring specialist solutions

If you have concerns about how the current maritime security environment is affecting your supply chain, contact our team for a no-obligation consultation. We are here to help you navigate uncertainty with confidence.

This analysis reflects conditions as of May 2026. The maritime security environment in the Gulf is dynamic — we recommend consulting with your freight forwarder and insurance broker regularly for the most current guidance.