The Iran Conflict Update: Global Shipping, Sanctions, and Governmental Relief
The Iran Conflict Update: Global Shipping, Sanctions, and Governmental Relief
By Hannah F. Atkinson
Continued monitoring of the evolving conflict in the Middle East remains imperative for businesses. Since last week and our previous article, the scale of disruption has increased, especially for those in the supply chain, as three cargo ships were hit as recently as March 11th. As early as this morning, Iran’s new supreme leader issued a statement that the country would continue to block the Strait of Hormuz. This update outlines the latest impacts on global shipping operations, the shifting sanctions landscape, and the limited relief measures the U.S. government has announced to date.
- Maritime Rerouting & Energy-Related Surcharges
One expert estimates that rerouting shipments around the Cape of Good Hope can add 10-14 days to the trip and about $1 million extra in fuel per ship. Several vessel-operating common carriers, including CMA CGM & Maersk, have announced the intent to reroute shipments around the Cape.
Around a fifth of the world’s oil travels through the Strait of Hormuz. This morning, the IEA published its March 2026 Oil Market Report and stated that this war has caused “the largest supply disruption in the history of the global oil market.” Earlier this week, Maersk implemented an Emergency Bunker Surcharge to account for the global fuel disruptions. This surcharge will start on March 25th—subject to Federal Maritime Commission’s approval—and may increase or decrease every 14 days. Hapag-Lloyd and MSC also announced similar surcharges.
Any change to a tariff by a common carrier requires at least 30 days between its publication and effective date, unless the Commission approves a special permission request to reduce this waiting period. Shippers may see surchargers quicker if the Commission grants special permission. But as recently as March 11, the Commission affirmed its commitment that “that rates, charges, and rules that common carriers have implemented as a result of commercial shipping in the Strait and neighboring waters do not violate the Shipping Act.”
Even with regulatory delays for new surcharges, businesses in the supply chain should consider examining their contracts, considering:
- Force majeure provisions that with prior notice, could excuse performance or allow rerouting of shipments: some companies have already started to declare force majeure on cargos; and
- Terms that speak to tariff responsibility, delay risk, and cost increases—keeping in mind the FMC’s regulations and its recent statement.
Companies should review these provisions closely, as their applicability will depend on each contract’s specific language.
- Evolving Sanctions Require Diligence
As recently as late February, the Office of Foreign Assets Control (OFAC) sanctioned over 30 individuals, entities, and vessels as a part of “Treasury’s ongoing campaign of maximum pressure on Iran.” As the conflict in Iran continues, OFAC may impose more sanctions and businesses will have to remain vigilant during screening, as the Specially Designated Nationals (SDNs) list expands and contracts.
Generally, OFAC regulations prohibit all transactions or dealings by U.S. persons that involve any property or interests in property of sanctioned persons. OFAC violations can carry significant civil penalties and operate under a strict liability basis, so companies should take care in screening and seek guidance as Iran sanctions continue to evolve.
- Limited Relief from the Government
U.S. International Development Finance Corporation (DFC) said it “will offer support to commercial shipping charterers, shipowners, and key maritime insurance providers to minimize market disruptions and help ensure the free flow of goods and capital.” As many in the transportation sector already know, war risk insurance premiums have surged by almost 300%. While the DFC has not released many details about its “Maritime Reinsurance” product, it has specified in two press releases that its $20 billion insurance “offering will apply only to vessels that meet eligibility criteria,” and “will focus on Hull & Machinery and Cargo.” So far, no eligibility criteria have been shared with the public, so it remains to be seen who will benefit from this DFC’s product.
Earlier in the conflict, President Trump signaled that the U.S. Navy could provide relief to vessels by escorting them through the Strait of Hormuz. However, as of March 11th, the U.S. Navy has not escorted any vessels during this conflict, and military officials have suggested there are no memorialized plans for escorts at this time. Therefore, it will take time for this possible escort relief to materialize, if at all.
The risks and benefits of these potential opportunities from the U.S. government are unclear; however, please contact us should you have any questions.
GKG Law, P.C., helped businesses during prior supply chain disruptions: COVID, port strikes, and the Red Sea attacks, and can help businesses analyze contracts, provide sanction guidance, and provide other support.
