The confirmation that Iran has laid naval mines in the Strait of Hormuz has officially turned a long-simmering threat into an active crisis for global energy markets.
This development is critical because it shifts the conflict from rhetoric to a physical denial of passage through the world's most important energy chokepoint. The first and most immediate consequence was seen in the insurance market. On March 5, maritime insurers began canceling or sharply repricing 'war-risk' cover for the Gulf. This isn't just a financial detail; it's the primary mechanism that halts physical trade. Without insurance, most commercial ships will not—and legally cannot—sail into a hazardous zone.
This de facto blockade triggered an immediate and severe market reaction. First, with about one-fifth of global oil consumption passing through the strait, Brent crude prices surged past $87 per barrel, marking the biggest weekly gain since 2020. Second, the cost of chartering Very Large Crude Carriers (VLCCs) skyrocketed to record levels, in some cases exceeding $400,000 per day. Third, the shock wasn't limited to oil. Qatar, which ships about 20% of the world's Liquefied Natural Gas (LNG) through Hormuz, was forced to halt production, causing European benchmark gas prices to spike by over 35%.
This crisis did not emerge from a vacuum, however. It is the culmination of months of escalating provocations. In February 2026, Iran conducted live-fire drills, explicitly demonstrating its ability to close the strait. This followed a pattern of seizing foreign oil tankers in late 2025 and early 2026. Even earlier, in mid-2025, reports surfaced that Iran was preparing to load mines onto vessels. These prior events created a foundation of credibility for the threat, ensuring that when the mines were finally deployed, the market's reaction would be swift and decisive.
Ultimately, the situation has moved beyond assessing threats to managing an active hazard. The key variable now is how quickly U.S.-led mine countermeasures can establish and secure safe transit corridors. Until then, the global economy faces a significant supply disruption that carries serious implications for energy security and inflation.
- Strait of Hormuz: A narrow, strategically important waterway between Iran and Oman, through which a significant portion of the world's oil supply passes.
- Brent Crude: A major benchmark price for crude oil purchases worldwide, used to price two-thirds of the world's internationally traded crude oil supplies.
- LNG (Liquefied Natural Gas): Natural gas that has been cooled down to liquid form for ease and safety of non-pressurized storage or transport.