Iran-U.S. Blockade: Risks to Global Trade and Oil Supply

Escalation between Iran and the United States in the Strait of Hormuz has disrupted global shipping and raised legal questions on maritime rights.

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Key Highlights of Iran–U.S. Blockade

• Escalation in Maritime Conflict: Iran attacked and detained ships in its waters following U.S. interception of Iranian-linked vessels on the high seas.
• U.S. Blockade Strategy: The U.S. imposed a non-physical blockade using surveillance, warnings, and ship interceptions to restrict Iranian maritime trade.
• Iran’s Retaliatory Measures: Iran fired on vessels and captured ships, citing violations of permits and maritime security norms.
• Disruption of Strait Traffic: Ship movement dropped drastically from ~100 daily transits to minimal levels due to conflict and uncertainty.

Impact of the Blockade

• Global Energy Supply Shock: The strait handles ~20% of global oil trade, and disruptions increased volatility in crude prices and supply chains.
• Impact on India’s Energy Security: India, a major oil importer, faced risks to supply lines though some Indian-flagged ships were allowed passage.
  • Over 45% of its crude oil and 60% of LPG imports passing through this, the world’s most important oil transit route
• Shipping & Insurance Costs Rise: War-risk premiums surged significantly, raising freight costs and affecting global trade logistics.
• Threat to Freedom of Navigation: Restrictions undermine established norms of free navigation, affecting merchant shipping worldwide.
• Geopolitical Tensions Intensify: The crisis deepens West Asia instability, drawing in global powers and increasing risk of wider conflict.

Laws Governing International Waters

• UNCLOS (1982, in force 1994): The United Nations Convention on the Law of the Sea ensures freedom of navigation on the high seas and guarantees transit passage through international straits like Hormuz.

• • Transit Passage Principle: Transit passage under UNCLOS allows uninterrupted and continuous movement of ships and aircraft through straits used for international navigation without coastal state interference. Innocent Passage Principle: Innocent passage permits ships to traverse territorial waters of a coastal state provided they do not threaten its peace, security, or sovereignty.
• UN Charter (1945): The United Nations Charter prohibits unilateral use of force except in self-defence or when authorised by the UN Security Council.

Factors Diluting Effectiveness of International Laws

• Lack of Enforcement Mechanism: International law depends on state compliance with no central enforcement authority.
• Great Power Politics: Major powers often bypass rules citing national interest or security concerns.
• Ambiguity in Maritime Provisions: Interpretational gaps in UNCLOS enable conflicting claims over rights and restrictions.
• Weak Multilateral Consensus: Divisions in global institutions hinder coordinated response and accountability.

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Way Forward

• Strengthening Multilateral Institutions: Bodies like the International Maritime Organization must play a proactive role in dispute resolution.
• Ensuring Freedom of Navigation: Global consensus is needed to uphold open sea lanes and prevent unilateral restrictions.
• Diplomatic De-escalation: Dialogue between Iran and the U.S. is essential to stabilise the region and restore maritime security.

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