US-Iran Tensions Escalate Over Control of Hormuz Strait, Shipping at Lowest in 5 Weeks

The conflict between the United States and Iran over control of the Hormuz Strait has escalated into armed clashes for a second consecutive day. Following Iran's attack on a commercial vessel transiting the strait and its declaration to close the waterway, the U.S. launched a series of airstrikes against Iranian military facilities. Iran retaliated by firing missiles and drones at U.S. military bases and allied nations in the Gulf region.

According to reports from AP and Reuters, the clashes began when the Islamic Revolutionary Guard Corps (IRGC) attacked the container ship 'GFS Galaxy,' registered in Cyprus, on July 11. The vessel suffered significant damage to its engine room and caught fire, forcing it to halt operations. Authorities in Oman rescued 23 crew members, but one Indian national remains missing.

The IRGC claimed that the ship ignored warnings and used a route not approved by Iran, asserting, "We will close the Hormuz Strait until U.S. military intervention ends."

The core of the conflict lies in who sets the navigation rules for the strait. The U.S. maintains that civilian vessels should be able to pass freely without Iranian approval, while Iran insists it has the authority to designate and manage the routes.

The U.S. has been supporting vessels to use the southern route along Oman to avoid Iranian territorial waters. Iran views this as an attempt to undermine its authority and has issued warnings to ships using that route. The attacked container ship was also navigating this path.

Following the attack on the commercial vessel, the U.S. launched extensive airstrikes targeting key Iranian military facilities from July 11 to 12. The strikes focused on missile and drone facilities, air defense systems, communication equipment, coastal radar, and IRGC vessels. The U.S. Central Command stated that the operation aimed to weaken Iran's capability to attack commercial vessels.

In response, Iran fired missiles and drones toward Bahrain, Kuwait, Qatar, Jordan, and Oman, where U.S. military bases and allied facilities are located.

In Qatar, debris from interception efforts injured three people, including a child. In Kuwait, a border post and offshore oil drilling facility were damaged, injuring one worker. Some facilities in Jordan were also reported damaged. Oman summoned the Iranian ambassador to protest the attacks on its territory.

The exchanges continued through July 13, with the IRGC claiming to have disabled the systems of two vessels in the Hormuz Strait, halting their operations. However, the names, nationalities, and details of the affected vessels were not disclosed.

The U.S. and Iran have conflicting claims regarding whether the strait is actually closed. The U.S. asserts that shipping operations are ongoing, indicating the strait remains open, while Iran insists it will prevent vessels from passing without its permission.

In reality, shipping activity has significantly decreased. According to shipping data provider Kpler, only six vessels transited the strait on July 12, the lowest number in five weeks. Most oil tankers were reported to have turned off their Automatic Identification Systems (AIS), and no liquefied natural gas (LNG) carriers were confirmed to have passed over the weekend.

While some vessels may have moved without AIS, the overall traffic is clearly down compared to the pre-conflict average of about 140 vessels per day.

The Hormuz Strait is a critical shipping route, accounting for approximately 20% of global oil and natural gas trade before the conflict. Concerns over escalating clashes and supply disruptions led to a more than 4% increase in Brent crude prices in Asian markets on July 13.

Oman recently proposed reopening both routes through its territorial waters during negotiations with Iran, including allowing the southern route to be used without prior approval as before the conflict. However, the Iranian delegation decided not to reach an agreement on-site and opted to review the proposal in Tehran. With attacks on commercial vessels occurring in the southern route and ongoing exchanges between the two nations, mediation discussions are now at risk of being halted.

This escalation raises the likelihood of derailing the memorandum of understanding (MOU) signed last month between the U.S. and Iran, which aimed to normalize shipping operations in the strait within 60 days. However, both sides have been unable to reconcile their differences over management authority and vessel safety guarantees.

Mediation efforts by countries such as Qatar, Pakistan, and Egypt are ongoing, but the cycle of commercial vessel attacks, U.S. airstrikes, and Iranian retaliation raises fears of a return to full-scale conflict.

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