Few waterways on Earth carry the geopolitical weight of the Strait of Hormuz. Stretching barely 29 nautical miles (54 kilometers) at its narrowest point between the coasts of Iran to the north and Oman and the United Arab Emirates to the south, this slender passage connects the Persian Gulf to the Gulf of Oman and, ultimately, to the world’s oceans. In 2025, an average of 20 million barrels per day (mb/d) of crude oil and oil products was shipped through the strait—roughly 25% of the world’s seaborne oil[1]—as well as a substantial proportion of global liquefied natural gas (LNG) exports.
It is no wonder that the current crisis has sent shockwaves through the global economy. But what does the situation mean in practice for shipping companies? What are the legal aspects of maritime trade that must be taken into consideration? This article does not permit exhaustive treatment of every relevant issue but focuses on the most pressing legal and commercial dimensions facing the industry today.
The transit passage regime and de facto closure
As a matter of international law, the Strait of Hormuz is generally seen as an international strait governed by the United Nations Convention on the Law of the Sea (UNCLOS). Under Part III of UNCLOS, vessels and aircraft of all states enjoy the right of transit passage solely for the purpose of continuous and expeditious transit of the strait between one part of the high seas or an exclusive economic zone and another part of the high seas or an exclusive economic zone. The Strait is so narrow that large vessels must pass through the border states’ territorial waters.
The right of transit passage is broader and more robust than the right of innocent passage that applies at territorial seas: transit passage cannot be suspended by the coastal state, even temporarily or, for example, due to a war. However, with the very increased threat of military actions against any commercial vessels attempting to transit the Strait, the passage has become so risky in practice that it can fairly be described as a de facto closure. From marine traffic data, one may easily see that the number of vessels transiting the Strait has fallen to a trickle.
During transit passage in a strait, vessels must proceed without delay and must refrain from any threat or use of force against sovereignty, territorial integrity, or political independence of coastal states of a strait. Vessels must also comply with internationally accepted regulations relating to safety of navigation, pollution prevention, and radio communications. States bordering a strait, for their part, are entitled to designate sea lanes and prescribe traffic separation schemes, but they may not hamper transit passage or impose requirements that would deny, impede, or impair it.
A critical complication arises from Iran’s relationship with UNCLOS. Although Iran is a signatory, it has not ratified the convention. Iran’s domestic legislation takes a more restrictive view of foreign naval vessels’ rights of passage through its territorial waters: Iran requires prior authorization for warships to enter its territorial sea and does not fully accept the UNCLOS transit passage regime as binding upon it.
Stranded vessels: Who bears the costs?
One of the most pressing practical questions arising from the de facto closure concerns vessels that find themselves effectively stranded while being unable to proceed with their intended voyage. The answer depends significantly on the contractual framework under which the vessel is operating.
Under a time charter, the vessel ordinarily remains on hire whilst awaiting orders from the charterer. This means that, as a general principle, it is the charterer who continues to bear the cost of the vessel during any period of delay, also including delays caused by the vessel’s inability to transit the Strait safely.
Under a voyage charter, the position is more complex. Where the delay is caused by war risks or safety concerns, the allocation of risk will depend heavily on the specific factual matrix and the terms of the charterparty. The timing of events is also relevant: for example, when the voyage instructions were accepted relative to when the security situation deteriorated. In practice, however, many of these disputes are set aside whilst the immediate safety concerns remain acute, with the parties reserving their legal positions for resolution once the situation has stabilized.
Vessel’s safety as the paramount consideration
Where charterers unreasonably insist that a vessel proceeds through a dangerous area, the final decision rests with the master. The safety of the vessel and her crew is the paramount consideration in maritime law, and no contractual obligation can override it.
Most charterparty agreements contain war clauses that expressly entitle the owner to refuse orders that would place the vessel, her crew, or her cargo at war risk. Where such an instruction is given, the owner is entitled to require alternative orders directing the vessel to a safe transit or port. If the charterer fails to provide such alternative orders, the owner will typically be entitled to elect to proceed to a safe port of their own choosing. Furthermore, where a charterer has failed to comply with its obligations under the war clauses, owners may in certain circumstances be entitled to discharge the cargo at the charterer’s expense — a significant commercial and legal consequence that charterers would be well advised to bear in mind.
Conclusion
The Strait of Hormuz crisis illustrates the tension between the certainties of international maritime law and the realities of armed conflict. UNCLOS guarantees the right of transit passage and no state can lawfully close the Strait or suspend that right, even temporarily. Yet the reality shows that the Strait is, to all intents and purposes, closed.
For shipping companies, charterers, traders, and their legal advisers, the current situation demands an urgent and careful review of contractual positions, insurance cover, and risk exposure. War clauses, force majeure provisions, hire obligations, and cargo liability frameworks may have seemed theoretical in calmer times, are now very much topical and critical issues. The legal questions that arise will ultimately depend on the precise terms of the agreements in place.
One thing is certain: just as the previous crisis, such as COVID-19 pandemic and the war in Ukraine, have done in the past, the events unfolding in and around the Strait of Hormuz will disrupt supply chains and generate a body of legal disputes — in arbitration, in the courts, and between states — whose resolution will shape maritime law for years to come.
HPP’s Logistics team can help clients navigate the complexities of the legal landscape.
[1] International Energy Agency (February 2026). Strait of Hormuz – Factsheet. https://www.iea.org/about/oil-security-and-emergency-response/strait-of-hormuz
