Shipping through the Strait of Hormuz is driving record costs for the maritime industry, as global fuel prices soar amid ongoing regional conflict. According to Transport & Environment (T&E), the Brussels-based analysts, shipping companies are facing an extra €340 million per day in fuel expenses since the outbreak of hostilities in the Middle East. Very low-sulphur fuel oil in Singapore has climbed to €941 per tonne, up more than 220% since the start of the year, while LNG prices have risen by 72% since early March.
The surge comes as Malaysia secures permission for its vessels to transit the strait, a development first reported by agency sources and subsequently covered by the Guardian in London. Malaysian Prime Minister Anwar Ibrahim said he had spoken with the leaders of Iran, Egypt, Turkey and other regional countries, and that Malaysian vessels were now being allowed to pass. The Guardian’s reporting echoes similar statements carried by Reuters, MarketWatch, Energy News and Bernama, giving independent confirmation.
Malaysian access confirmed
Anwar Ibrahim thanked Iran’s president, Masoud Pezeshkian, for allowing the passage of Malaysian ships and said oil tankers and their crews were being released to continue their journey. Although Malaysia is an oil-producing country, roughly half of its oil supply normally passes through the strait, making uninterrupted access critical. Diplomatic coordination has already allowed a handful of Thai and Chinese vessels to transit, with some ships paying tolls to Iranian authorities, highlighting the highly selective nature of current passage arrangements.
The UK has offered to host an international security summit to reopen the strait, underscoring the economic significance of this trade route. Defence and maritime officials have emphasised that around 20% of global oil typically moves through Hormuz, so any disruption quickly translates into wider cost pressures for shipping companies. The limited number of transits allowed so far illustrates both the logistical and financial risks that remain as conflict persists in the region.
Costs of shipping escalate
According to T&E, the shipping industry has already incurred more than €4.6 billion in extra fuel costs since the conflict began. The majority of the global fleet runs on fossil fuels, leaving companies highly exposed to price volatility and supply disruptions. Marine fuels such as VLSFO and LNG have surged in cost, narrowing the gap with cleaner alternatives, including e-fuels, which in some ports are now within 5% of fossil fuel prices.
Eloi Nordé, T&E shipping policy officer, said the crisis demonstrates the vulnerability of fossil fuel-dependent shipping to geopolitical shocks. “Chaos in the Strait of Hormuz is putting global maritime trade under the spotlight,” he said. “The war is costing the industry millions every day, far exceeding the perceived expense of green fuels and efficiency measures. Now is the time for investment in European e-fuels and energy efficiency technologies to mitigate future disruptions.”
Efficiency and energy transition
T&E highlights opportunities to reduce reliance on fossil fuels, particularly for short-sea cargo vessels and ferries that could be electrified. Modern wind-assist technologies and slow steaming for ocean-going ships could cut fuel consumption by up to 18%, according to the analysis. Scaling up domestic e-fuel production in Europe would also help shipping companies hedge against international price spikes and improve energy security.
The combination of heightened fuel costs and selective vessel access through Hormuz is reshaping the economics of maritime trade. Operators face both immediate cost pressures and longer-term strategic decisions about energy transition, investment in efficiency, and routing flexibility. The Malaysian transit deal offers temporary relief for one nation’s fleet, but global shipping continues to navigate unprecedented volatility and uncertainty.