Strait of Hormuz – Its closure and its Implications
Against a background of escalating geopolitical tensions in the Middle East, international law does not permit Iran to obstruct transit passage through an international strait such as the Strait of Hormuz (the “Strait”). Yet, the mere declaration of closure (let alone threats issued by Iran’s Islamic Revolutionary Guard Corps (“IRGC”)) has unsettled markets and disrupted shipping routes, with several vessels having reportedly been hit/attacked up to today. What was long-regarded as a dependable conduit of global trade has become a narrow passage burdened with immense consequences for the global shipping world which, once again, draws attention to the significant risks and disruption associated with a full closure of the Strait.
Current – is the Strait of Hormuz closed?
Whilst the Strait has not been legally closed, the IRGC has reportedly sent warnings via VHF that the Strait is shut down. As of 3 March, a senior IRGC official Ebrahim Jabari stated: “The strait is closed. If anyone tries to pass, the heroes of the Revolutionary Guard and the regular navy will set those ships ablaze.” As of 12 March, the total number of vessels that have been confirmed to have been hit and/or attacked in the region amount to approximately 16. Despite no formal NAVAREA or IMO Safety Information, warnings or an imposition of an exclusion zone, the commercial intake, in practice, is that more and more vessels refrain from transiting the Strait. The Joint Maritime Information Centre (“JMIC”) had upgraded its regional risk assessment to ‘critical’ and has now indicated that the risk remains “critical” since the persistent threats and given the numerous attacks reported in the past few days. Vessels have been advised by US Marad Maritime Alert 2026001A to avoid the region and proximity to US military vessels.
Relatedly, it is reported that Houthi officials have indicated that they will be targeting vessels in the Red Sea. With passages under threat, vessels will either be trapped or have to deviate through the Cape of Good Hope.
Summary of legal implications
Stakeholders will be looking out for daily updates from the relevant authorities and regulatory bodies including their insurers. In this respect, immediate charterparty concerns (discussed in detail here), are growing prevalent, including concerns around deviation and safe port considerations. The existence of any express liberty clause or an implied right to deviate for the safety of the vessel, crew and cargo and whether a deviation is ‘reasonable’ are all aspects which will require careful consideration. It should be noted however, that an unreasonable deviation may deprive the carrier of contractual rights and may result in P&I cover being lost. Parties are therefore advised to consult with their insurers along with all parties involved in the voyage before such decisions are made. Critically, owners should monitor the position carefully and record their reasoning to mitigate any exposure vis-à-vis allegations of unreasonable deviation.
Similarly, the question of whether parties may be able to successfully employ force majeure clauses in their charterparties or to rely on the legal doctrine of frustration, are all entirely pertinent.
Where BIMCO War Risks Clauses of 2025 for time and voyage charterparties have been incorporated, owners would, in principle, be entitled to rely on those provisions if transit through the Strait or operations in the surrounding region expose the vessel to war risks. In such circumstances, a refusal to comply with charterers’ employment orders may well be contractually justified.
The geopolitical situation is in flux and amidst the uncertainty, parties must be aware of their rights and obligations, the risks assumed or imposed and all the legal implications.
Potential implications for Singapore
Singapore functions as a major commercial centre for tanker chartering in Asia, with shipowners, traders and other stakeholders routinely operating from Singapore. In this regard, the Maritime Port Authority of Singapore (“MPA”) reported that, in January 2026, 12,031 vessels arrived in Singapore and, as of the end of last year, there were 4,230 Singapore-flagged vessels. Accordingly, disruption to the Strait will have significant implications for shipping activity in the region, particularly as a substantial portion of tanker employment in Asian markets is linked to export trades from the Gulf region, so that any restriction of access to the Strait could materially affect fixture patterns, voyage economics and profitability and laycan planning. Practical issues will also arise in relation to deviation decisions, war risk premiums and the allocation of losses for delay where vessels are required to reroute or await revised employment orders.
As discussed above, the escalating situation in the Strait is causing concern and there are various issues that should be kept in mind. We are seeing and expect to see disputes relating to the scope of safe port warranties, the recoverability of any additional insurance premiums and whether circumstances surrounding a closure or restriction of the Strait justify the refusal of voyage orders. A further key area concerns the availability of contractual and common law relief as we expect to see an increase in parties seeking to rely upon force majeure and frustration to avoid performing their obligations. Parties should be careful to be aware of nuanced differences in the interpretation of force majeure and frustration between jurisdictions, as each jurisdiction will operate within a distinct statutory framework.
Singapore’s role as a leading maritime dispute resolution hub also means that contractual disputes arising from this disruption may well be resolved in the jurisdiction. A large number of shipping contracts negotiated in Singapore are governed by English law but provide for arbitration in Singapore, commonly under the rules of the Singapore Chamber of Maritime Arbitration (“SCMA”) or the Singapore International Arbitration Centre (“SIAC”). In 2024, the SCMA reported a 112% increase in cases over the previous five-year average and the SIAC handled 625 new cases. Singapore continues to be a preferred seat of arbitration because it offers neutrality, procedural efficiency, and robust judicial support for arbitral proceedings. Coupled with a deep pool of maritime expertise and institutions such as the SIAC and SCMA, these features underpin its status as a leading venue for the resolution of shipping‑related disputes.
At a regulatory level, the MPA will play a central role in supporting Singapore’s position as a global maritime hub. During this period of instability, the MPA will be coordinating with shipowners, port operators and maritime service providers to maintain the resilience of Singapore’s maritime ecosystem. This institutional framework, combined with the high concentration of stakeholders located in Singapore, reinforces Singapore’s importance as an operational and commercial centre for the global shipping industry.
