Geopolitical tensions between Iran and Israel are having significant implications for the dry bulk shipping industry. Currently, vessel traffic in the Strait of Hormuz remains steady and aligns with seasonal averages, demonstrating the market’s resilience to the surrounding uncertainties. In contrast, the Suez Canal has experienced a marked decline in traffic since early 2025, as concerns over vessel security have taken precedence.
The Strait of Hormuz, however, has maintained consistent levels of shipping activity. The worst-case scenario would involve a complete closure of the Strait of Hormuz, which would severely disrupt trade flows. Although the overall tonnage may not be vast, the economic implications for Gulf countries could be substantial.
Reduced grain imports would compromise food security, and interruptions in raw material deliveries could hinder ongoing construction projects. The UAE, in particular, stands to be heavily affected, as it has received a significant portion of dry bulk tonnage in the Arabian Gulf, with minimal import capacity outside the Strait. This could lead to congestion in the few accessible ports, driving up freight rates and creating logistical challenges.
A more likely scenario involves partial disruptions in the Strait, potentially from Iran-backed attacks or hijacking incidents. This could deter ship owners from entering the region, resulting in a reduced availability of vessels and increased freight costs. Nonetheless, given that the Arabian Gulf’s dry bulk shipping is relatively small on a global scale, the overall impact on freight rates might be minimal.
Iran’s strategic position remains complex. Although the nation is a major oil exporter to China, any aggressive actions to disrupt shipping could destabilize its oil revenues, particularly in light of ongoing U.S. sanctions. Ultimately, the evolving nature of the Iran-Israel situation implies that the likelihood of a full closure in the Strait is diminishing, and it may not significantly affect dry commodity prices or freight rates.