Hormuz Standoff: Iran's Harassing Fire Keeps Supertanker Costs at Record Levels

At least 28 open-source reports of damage to commercial shipping were logged in the Strait of Hormuz in October — a monthly record — even as transits through the waterway held near 80% of prewar levels. The combination defines the standoff between Washington and Tehran: Iran has not raised its tempo of attacks, but the risk attached to every voyage has inflated insurance costs and kept oil prices elevated, according to a US official with direct knowledge of the matter and analysis first reported by Bloomberg on Oct. 31.

For Iran, the pain is fiscal. The US blockade of its oil exports has cut flows to a tiny fraction of the prewar 2 million barrels per day, now moving only via land routes, and has severely hobbled the country's $300 billion economy. For the US, the cost shows up at the pump. Rising shipping costs through the strait have kept fuel prices high and stirred a political backlash at home, with midterm elections set for Nov. 3.

Why the market feels it without a full blockade

Iran does not need a high tempo of strikes to keep risk premiums alive. In early October, hiring a supertanker in some parts of the world cost more than sending a rocket into space, a measure of how far war-risk pricing has stretched. US Central Command says almost all Iranian attacks fail or are intercepted, and about 95% of ships transit the strait without incident — yet the International Maritime Organization counts 121 incidents in Hormuz and the wider region since the war began, including 24 confirmed seafarer fatalities.

Damage patterns are shifting toward the serious. A quarter of the damage reports in the first two weeks of October involved strikes on engine rooms, which can take vessels out of service entirely, the US official said. On Friday, the UK Maritime Trade Operations office reported a tanker damaged by explosives placed on its hull. No ship has struck a floating mine during transit, the official said, although Iran claimed as recently as late October that a mine damaged a tanker.

Can Iran sustain the campaign?

Jim Lamson, a visiting research fellow at King's College London's Department of War Studies and a former CIA analyst focused on Iran, argues that economic pressure alone will not stop what he calls "harassing fire." US airstrikes have severely degraded Iran's ability to manufacture anti-ship weapons at scale, but a stockpile of missile components lets Tehran keep assembling them.

"They have been planning for a long-term asymmetric conflict with the US for decades," Lamson said. "Things like building in resilience, building in redundancy, building in stockpiling — these have been part of their military culture."

John Miller, a retired US Navy vice admiral and former head of Central Command, framed the choice starkly: "As long as they want to have a blockade in place, they can continue to attack ships in the Strait of Hormuz. This has always been the case: You can either make them unwilling or unable."

How transits keep running

The US works directly with the shipping industry, sharing information and coordinating timing, routes and numbers for vessels passing in either direction, then assigns assets to track each journey and shoot down threats. Much of Iran's ability to track ships beyond visual range of its shores has been destroyed over the past eight months, Miller said, so its cruise missiles and drones are often fired blind into areas where ships might be, with radar or infrared seekers guiding them to whatever is nearby.

The cost asymmetry favors the defense on cheap weapons. Aircraft armed with APKWS missiles — roughly $20,000 for a BAE Systems guidance kit — handle drones and cruise missiles, while expensive Navy interceptors such as the Raytheon SM-6 and SM-3 Block IIA are reserved for ballistic missile threats.

The economics still favor sailing. Supertanker owners are earning tens of millions of dollars per transit through the waterway, with crews banking several months' pay for a few days of dangerous navigation — enough incentive to keep Middle East oil moving at near prewar volumes.

What comes after Nov. 3?

President Trump has previewed renewed attacks on Iran after the midterms, but Emma Salisbury, a non-resident senior fellow at the Foreign Policy Research Institute, cautions that airstrikes against an adversary hardened by decades of planning may not change conditions in the strait. Bloomberg Economics' Ziad Daoud estimates a surge in fighting could push oil prices into the $120–$130 range, noting both sides "may prefer a brief conflict to improve their negotiating power" — a trajectory that keeps war-risk premiums, and freight costs, firmly in place.