U.S.-Iran war reshapes Hormuz traffic, energy markets and alliances

Longer routes push tanker costs above $500,000 a day

The Wall Street Journal’s Aug. 28 account describes how the Feb. 28 opening strike killed Iran’s leader and set off a monthslong conflict involving the United States, Israel and Iran. Drones reached Dubai within hours, Hezbollah in Lebanon broke its ceasefire with Israel, and attacks reached U.S. bases as far away as Diego Garcia.

The Strait of Hormuz has become the conflict’s central pressure point. Average daily vessel traffic fell from about 130 before the war to 15 in August, according to ship trackers cited by the Journal. Iran and the United States have each tried to establish a new route through the international waterway: Iran close to its shoreline and the U.S. through a channel along the Omani coast, where most attacks occurred.

The vessel analysis excluded ships that moved less than 100 miles during the period or stopped broadcasting their location for more than 90 minutes. The Journal also noted that some ships in the region may transmit false locations.

Predictions that the strait’s closure would push oil above $150 a barrel did not materialize. Oil prices have hovered around $80 a barrel, while gasoline prices have risen to about $4 a gallon from $2.98 before the war. The report attributed the difference to alternative routes for moving oil out of the Persian Gulf and to reduced oil imports by China.

Countries have also rapidly drawn down oil reserves. U.S. crude-oil inventories in the Strategic Petroleum Reserve have reached their lowest level since the 1980s.

Sailing an oil supertanker from the Persian Gulf to China now costs more than $500,000 a day, more than double the rate before Iran began attacking shipping in the strait, according to Clarksons Research. The maritime data provider attributed the increase to higher expenses, including insurance, and a decline in the number of shippers willing to make the dangerous voyages.

The Iran-backed Houthis subsequently declared a maritime blockade of Saudi Arabia in the Red Sea after the strait closed. The blockade forced some shippers traveling to Asia to reroute through the Suez Canal, adding about 30 days to the journey.

Gulf energy producers are responding with longer-term infrastructure changes. The United Arab Emirates, Kuwait and Iraq are investing billions of dollars in new oil pipelines as the region develops a new logistics map built around trucking, rail and additional ports.

The Journal’s chronology recorded the start of Project Freedom on May 4 as an aborted U.S. attempt to reopen the Persian Gulf. A memorandum of understanding was signed in Versailles on June 17. President Trump wrote on Truth Social on July 4 that the United States was “very far along with a definitive Agreement,” and the Houthis declared their blockade of Saudi Arabia on July 20. Trump tabled plans to escalate strikes against Iran on July 24, and the United States announced an “economic D-Day” targeting Iran and countries that back it on Aug. 24.

The United States struck more than 13,000 targets in Iran before the April 8 ceasefire and destroyed most of Iran’s navy, according to the report. Iran’s fleet of fast attack boats has not been eliminated, however, and Iran continues to attack commercial ships with drones and missiles.

Trump said this week that all mines in the strait’s international waters had been removed or detonated and warned that new mines would be destroyed. In early June, he told NBC that Iran’s military had been “totally destroyed” and that Iran had few missiles remaining. The report said Iran is thought to have hidden much of its munitions underground and used the ceasefire to move equipment, while U.S. officials have observed that Iran’s ballistic missiles appear faster and more maneuverable.

Since the opening strike killed his father and predecessor, Supreme Leader Mojtaba Khamenei has reorganized Iran’s forces in preparation for continued fighting. The report said the changes were intended to tighten the military chain of command, turn an ideological militia into a neighborhood-based intelligence agency and emphasize offensive operations. The Islamic Revolutionary Guard Corps has sent advisers to Iraq, Yemen and Lebanon to discuss plans with allied militias.

The Journal said most damage to Iran’s core nuclear facilities occurred during U.S.-Israeli strikes in June 2025. Trump has threatened to attack underground facilities that Iran could use to revive its nuclear program and has discussed seizing Iran’s enriched-uranium stockpile, but the United States has attempted neither action. Estimates of how far Iran’s ability to make a nuclear weapon has been set back range from several months to several years.

Talks over Iran’s nuclear program have stalled, while an agreement to reopen the Strait of Hormuz has become the more immediate issue. Under the U.S. blockade, Iran’s shipments of crude oil and condensate fell to about 280,000 barrels a day in May from more than 2.2 million in February. Exports recovered under a deal to reopen the strait but declined again after the agreement collapsed.

Iranian consumer prices are more than 80% higher than a year earlier, while the International Monetary Fund expects Iran’s economy to contract 5.4% this year. The Journal said shifting the economic burden onto households has enabled the Iranian government to endure and resist pressure for concessions.

Higher oil, gas, fertilizer and transportation prices have weighed on economic growth, particularly in Europe and Asia. The IMF now expects global inflation to rise to 4.7% this year from 4.1% in 2025, interrupting a decline that had continued since 2024. The shock has also given monetary policymakers another reason to move cautiously on interest rates.

Some military officials had warned before the war that U.S. bases in the Gulf were exposed. Extensive damage to the sole U.S. naval base in the Middle East, in Bahrain, and attacks on at least 20 U.S. military and diplomatic sites across the region led the United States to reassess its regional footprint. A proposal to move installations farther west was raised during Trump’s first term but was not adopted.

Defense Secretary Pete Hegseth estimated the war’s cost at $37.5 billion in July, before the latest strikes in August. Earlier in the conflict, Hegseth responded to lawmakers’ questions about the cost by asking how much they would pay to ensure Iran does not obtain a nuclear weapon.

Turkey, Saudi Arabia and Pakistan signed their collective-defense pact in early August as the war raised concerns about the U.S. security umbrella. Russia earned $12.7 billion a month at the height of the fighting through higher oil prices and a temporary U.S. waiver on oil sanctions, according to European Union officials; the waiver ended in June.

Domestic support for military action has also declined. Fox News polling found that approval among registered voters fell from 50% at the end of February, when the conflict began, to 43% in mid-July.

Disruptions in Qatar, a major helium producer, raised prices of helium used in semiconductor manufacturing for the artificial-intelligence industry and in MRI machines. The conflict also increased sulfuric-acid prices and put pressure on supplies of naphtha, a raw material for plastics, solvents and paints. Japanese snack maker Calbee said the naphtha shortage prompted plans to use black-and-white packaging for some of its potato chips.

Human Rights Activists News Agency counted more than 3,600 deaths in Iran, most if not all before the April 8 ceasefire. The Journal reported that 18 U.S. service members died from Iranian drone and missile attacks and military mishaps, with hundreds more injured. Amnesty International counted 28 civilian deaths and hundreds of injuries in Arab Gulf countries from Iranian and allied attacks through June 3.

The report’s broader assessment is that the world’s strategic chokepoints have become potential theaters of conflict, with control over them providing political and economic leverage. In the six months since the war began, changes in traffic through the Strait of Hormuz, regional energy infrastructure and security alliances have extended the conflict’s effects well beyond the battlefield.