Shipping costs surged across the Middle East in June, with rates from Shanghai to the UAE’s Port of Khor Fakkan jumping 76% due to fears over Iran-Israel tensions. Despite President Donald Trump’s announcement of a ceasefire on Monday, risks remain high for global shipping lanes, particularly through the Strait of Hormuz.
The Port of Khor Fakkan, near the critical Strait of Hormuz, faces mounting concerns as Iran continues to threaten the waterway. This narrow passage is a chokepoint for 20% of the world’s oil supply. If Tehran or its terrorist proxies launch attacks on passing tankers, trade routes between the Middle East, India, and Africa could grind to a halt.
Rates reached $3,341 per forty-foot equivalent unit (FEU) for shipping from Shanghai to Khor Fakkan, up from May’s figures. Freight analysts like Peter Sand of Xeneta attribute the spike to both front-loading cargo and increased fuel use by ships speeding up to avoid danger. While oil prices have remained surprisingly low, high shipping costs signal deep market uncertainty.
Frontline, a major oil tanker operator, is currently rejecting any contracts requiring passage through the Strait of Hormuz, citing security threats. Meanwhile, Maersk and Hapag Lloyd continue operations despite the Iranian parliament’s vote supporting a blockade, a move that has so far helped prevent further cost escalation.
India, heavily dependent on the Strait for oil imports, warned that a closure could create “major disruption.” Nearly 65% of its crude oil imports flow through the area. Disruptions could also threaten India’s $8.6 billion in exports to Middle Eastern nations like Iraq and Jordan.
President Trump’s decision to order strikes on Iranian nuclear facilities triggered fears of a full-scale war, but Iran’s response was restrained and largely symbolic. As a result, markets rallied, with U.S. stock indexes rising about 0.5% on the news. Still, the threat to shipping remains a pressure point for the global economy, especially if Iran shifts tactics or proxies act independently.
