UPDATE: Return of Red Sea cargo “less likely” after attacks on Iran

Major ocean container lines are less likely to return to the Red Sea/Suez Canal route, analysts said, as Israel and Iran continued to trade military strikes.

There were no immediate reports of attacks on commercial shipping by Iran after Israel attacked nuclear targets there Thursday. But industry observers warned that could change amid rising tensions in the region.

Published reports said Iran’s parliament was considering closing the Strait of Hormuz to vessel traffic, in an effort to put economic pressure on Israel and its allies. The narrow maritime passage between Iran and Oman serves as the trade gateway for global container traffic and 20% of the world’s crude oil supply moving via tankers from the Persian Gulf. The waterway was last closed in 1984 during the Iran-Iraq war.

“Any closure of the Strait of Hormuz would see services re-routed, with increased reliance on India West Coast ports for connecting the Far East to Indian sub-continent,” said Peter Sand, chief analyst with Xeneta, in a research note. “The inevitable disruption and port congestion, as well as the potential for higher oil prices, would cause a spike in ocean freight container shipping rates, with carriers likely also pushing for a ‘security surcharge’ on these trades in the coming days.

“This escalation also makes a large-scale return of container ships to the Red Sea seem less likely, a situation which continues to have a major impact on ocean container shipping rates 18 months after Iran-backed Houthi militia in Yemen began attacking vessels in the region.”

Those attacks forced major container lines connecting Asia with Europe and the United States to divert away from the Red Sea on longer voyages around Africa’s Cape of Good Hope. The Houthis have since shifted their missile attacks directly toward Israel, but ocean carriers have said that the route remains too unstable for a return of scheduled services.

Vessel tracking websites showed maritime traffic continuing to flow through the Strait of Hormuz Saturday, including container ships of Mediterranean Shipping Co., Evergreen, and Seaspan.

United Kingdom Maritime Trade Operations (UKMTO), which monitors Middle East shipping, said increased tensions in the region “could lead to an escalation of military activity having a direct impact on mariners. Vessels are advised to transit the Arabian Gulf, Gulf of Oman and Straits of Hormuz with caution.”

Iran still holds hostage the 14,000-TEU container ship MSC Aries, which it detained in 2024.

Maritime analysts said increasing conflict could lead major container carriers to withdraw services in the straits, as attacks by Yemen-based Houthi rebels did in the Red Sea.    

“If this leads to major container lines avoiding transits through the Strait of Hormuz, this will severely impact links to the major container terminal transshipment hubs inside the Persian Gulf such as Jebel Ali [in Dubai] and Port Khalifa [in Abu Dhabi], said analyst Lars Jensen, in a LinkedIn post. “A  ripple effect would be a sharp increase in handlings with a high risk of wider Asian congestion issues.”

Iran’s state news agency Friday denied reports that it had struck back at Israel with drones. Tehran also accused the United States of aiding Israel’s strikes, a charge denied by U.S. Secretary of State Marco Rubio.

The attacks by Israel pushed West Texas Intermediate crude oil prices by more than 9%, while crude oil futures rose 13%.

Airlines are canceling and diverting flights because of the potential danger from a missile attack. Many flights between Asia and Europe are being rerouted further south over Saudi Arabia and Egypt, according to multiple news outlets.

Airlines have also suspended flights to Tel Aviv in Israel and Tehran.

Flying less direct routes will add fuel cost and time to flights, which could result in less cargo capacity to make room for extra fuel. Western airlines already have to utilize less efficient routes because of the war in Ukraine war closure of Russian airspace. 

This article was updated June 14 to add quotes from Xeneta analyst Peter Sand.

This article was updated June 13 to add information on airline cancellations.
— with reporting by Eric Kulisch in Vancouver, Wash.

Find more articles by Stuart Chirls here.

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