Strait of Hormuz shipping slows sharply as Iran re-closes waterway, citing US and Israeli violations of the interim peace deal
Oil prices rose on Monday after shipping through the Strait of Hormuz — the narrow chokepoint through which roughly 20% of the world's oil supply passes — fell sharply, following Iran's announcement that it had again closed the waterway. Tehran cited violations of the interim peace deal by Israel and the United States as justification. The closure came as the first formal talks between US and Iranian officials under the interim peace deal got off to a difficult start at the Lake Lucerne Summit in Switzerland on 21 June. The number of ships transiting the Strait dropped materially on Sunday, according to shipping data cited by Reuters. Oil prices responded by rising on the supply-disruption risk, reversing earlier optimism from Asian markets that had been pricing in a more stable peace process. Separately, Russia claims to have repelled a Ukrainian drone attack on an oil refinery in the Tyumen region, adding a second front of energy infrastructure risk to global markets. Moscow also shot down close to 60 drones over the capital over the weekend, with Moscow airports temporarily disrupted before reopening. For energy and infrastructure lawyers, the combination of Hormuz closure risk and drone attacks on refinery infrastructure raises live questions around force majeure clauses in long-term energy supply contracts, shipping insurance coverage under war-risk exclusions, and the legal status of sanctions unwinding in a partial peace deal context.
Why this matters
Each re-closure of the Strait of Hormuz creates direct work for energy lawyers advising on force majeure (a contract clause excusing performance where circumstances beyond a party's control make delivery impossible) provisions in oil supply agreements, LNG (liquefied natural gas) offtake contracts, and long-term power purchase agreements. Shipping lawyers are simultaneously fielding questions about war-risk insurance coverage as the legal status of the Hormuz closure — is it a belligerent act, a sovereign right, or a treaty violation? — remains contested. The peace deal's fragility also affects sanctions lawyers: the partial unwinding of Iran sanctions creates a legal grey zone for companies considering re-entry to Iranian markets, since re-engaging before formal sanctions removal carries significant exposure under both US and UK/EU sanctions regimes. The drone attack on the Tyumen refinery adds a separate strand of energy infrastructure risk requiring insurance and contract law analysis.
On the Ground
A trainee on an energy infrastructure or shipping finance matter would be reviewing grid connection agreement equivalents in the LNG context — specifically, analysing force majeure and change-in-law clauses in supply contracts, summarising regulatory filing requirements triggered by disruption to energy supply chains, and coordinating sanctions screening memos for clients considering Iran market re-entry.
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“What legal issues arise for a UK energy company that signed preliminary contracts to re-enter Iranian markets under the interim peace deal, if Iran now re-closes the Strait of Hormuz?”
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