The Strait of Hormuz: A Dangerous Chokepoint Amid GPS Jamming and Geopolitical Tensions

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The Strait of Hormuz, the narrow waterway connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea, remains one of the world’s most critical and volatile energy chokepoints. Recent reports of widespread GPS jamming, six supertankers executing abrupt U-turns, and escalating tensions between Israel and Iran have reignited concerns about the stability of oil and liquefied natural gas (LNG) flows through this vital passage. As questions swirl about the durability of a potential ceasefire and Iran’s next moves, the global energy market is on edge, with fears of disruptions that could send oil prices soaring and strain supply chains worldwide.

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GPS Jamming and Maritime Chaos

Since June 13, 2025, when Israel launched strikes on Iranian nuclear and military targets, GPS jamming and spoofing have surged across the Strait of Hormuz and the broader Persian Gulf. According to Windward, a maritime analytics firm, nearly 1,000 ships daily are experiencing navigational disruptions, with faulty Automatic Identification System (AIS) coordinates causing confusion and increasing the risk of collisions. The UK Maritime Trade Operations (UKMTO) has confirmed these interferences, noting that military-grade spoofers are falsifying vessel positions, sometimes placing ships on land or in entirely different regions, such as rural Russia or southern Iran.

This electronic warfare, likely orchestrated by Iran’s Islamic Revolutionary Guard Corps (IRGC), has already had tangible consequences. On June 17, 2025, two oil tankers, Front Eagle (operated by Frontline) and Adalynn (part of the so-called “dark fleet”), collided off the UAE’s Khor Fakkan due to navigational errors linked to GPS jamming. The incident, which caused a small oil spill and a fire on Front Eagle, underscored the heightened risks in the region. Frontline, a major tanker company, has since announced it will no longer accept new charters through the Strait, a move likely to be followed by other operators as insurance costs and war risk premiums soar.

Supertankers U-Turn Amid Uncertainty

Over the weekend of June 22-23, 2025, six supertankers, including Coswisdom Lake and South Loyalty (each capable of carrying 2 million barrels of crude), performed abrupt U-turns in the Strait of Hormuz, opting to avoid the waterway amid fears of Iranian retaliation. Other vessels, such as Kohzan Maru, Red Ruby, Marie C, and Damsgaard, also altered courses or anchored outside the Strait, reflecting a broader trend of caution among shipowners. These diversions signal a de facto partial supply disruption, as tanker companies weigh the risks of missile strikes, drone attacks, or naval mines against the need to transport energy cargos.

The Adalynn, involved in the recent collision, is part of the “dark fleet”—a shadowy network of tankers that often operate without AIS transponders or with spoofed signals to evade sanctions. These vessels, frequently carrying Iranian or Russian oil, complicate maritime safety and tracking efforts. While exact numbers are elusive, estimates suggest the dark fleet comprises hundreds of tankers, with dozens active in the Persian Gulf at any given time. Spoofing, where crews intentionally disrupt AIS signals to conceal a ship’s location or cargo, has become a hallmark of these operations, further exacerbating navigational chaos in the Strait.

Oil and LNG Flows: A Global Lifeline at Risk

The Strait of Hormuz handles approximately 20% of global oil consumption and 20% of the world’s LNG trade, making it indispensable to global energy markets. In 2024, an estimated 20 million barrels per day (b/d) of crude oil, condensate, and petroleum products flowed through the Strait, alongside significant LNG volumes. Saudi Arabia leads exports through the Strait, accounting for 38% of crude flows (5.5 million b/d), followed by Iraq, the UAE, Kuwait, and Iran. Qatar, the world’s third-largest LNG exporter, relies heavily on the Strait to ship nearly all its LNG, with daily transits supporting global gas markets.

Key importing countries include China, India, Japan, and South Korea, which collectively accounted for 69% of crude oil and 83% of LNG flows through the Strait in 2024. China, in particular, is a major buyer of Iranian oil, importing around 90% of Iran’s 1.7 million b/d in exports. The United States, by contrast, imports only about 0.5 million b/d through the Strait, representing 7% of its total crude imports, thanks to its robust domestic production.

Major tanker companies operating in the region include Frontline, Nippon Yusen, Mitsui O.S.K. Lines, and Formosa Petrochemical Corp, all of which are now minimizing time spent in the Strait due to heightened risks. Shipping rates for very large crude carriers (VLCCs) have spiked, with rates from the Middle East to China jumping nearly 60% to $53,000-$60,000 per day in less than a week.

The Dark Fleet and Sanctioned Tankers

The dark fleet, often linked to sanctioned oil from Iran and Russia, poses a unique challenge. These tankers, including vessels like Adalynn and Xi Wang Mu (previously sanctioned by the U.S.), frequently disable AIS transponders or spoof signals to obscure their activities. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has targeted such networks, recently announcing actions against Iran’s defense procurement and Houthi oil smuggling operations. While precise figures are unavailable, maritime analysts estimate that dozens of dark fleet tankers operate in the Persian Gulf, with spoofing incidents affecting nearly 1,000 ships since the Israel-Iran conflict escalated. This opacity not only heightens collision risks but also complicates efforts to monitor sanctioned oil flows.

Geopolitical Tensions and Ceasefire Doubts

The current crisis stems from U.S. and Israeli strikes on Iranian nuclear facilities, prompting Iran’s parliament to approve a motion to close the Strait, though the final decision rests with the Supreme National Security Council. Iran has historically threatened to block the Strait but has never followed through, as it relies on the waterway for its own oil exports to China and other markets. Analysts, including RBC Capital Markets’ Helima Croft, suggest Iran may opt for targeted strikes on tankers or infrastructure, such as the UAE’s Fujairah port, rather than a full closure, which could alienate allies like China and provoke a U.S.-led military response.

The prospect of a ceasefire between Israel and Iran remains uncertain. U.S. President Donald Trump has accused both sides of violating a tentative truce, while Iranian officials warn of severe consequences for U.S. actions. The U.S. Fifth Fleet, based in Bahrain, stands ready to protect commercial shipping, but any escalation—such as naval mines or attacks by Iran’s proxies in Iraq or Yemen—could disrupt flows and push oil prices above $110 per barrel, according to RBC estimates.

Implications for Global Energy Markets

A partial or full disruption of the Strait would have catastrophic effects. A 50% reduction in oil flows for one month, followed by a 10% reduction for 11 months, could see Brent crude peak at $110, with European natural gas prices exceeding 100 EUR/MWh. Asian markets, particularly China, India, and Japan, would face severe supply shortages, driving up fuel and manufacturing costs and potentially fueling global inflation. Alternative routes, such as Saudi Arabia’s East-West Pipeline (5 million b/d capacity) and the UAE’s Habshan-Fujairah Pipeline (1.8 million b/d), offer limited relief, with only 2.6 million b/d of unused capacity available to bypass the Strait.

Conclusion: A Ticking Time Bomb

The Strait of Hormuz remains a dangerous flashpoint, where GPS jamming, dark fleet operations, and geopolitical brinkmanship threaten the free flow of oil and LNG. With six supertankers already turning back and major operators like Frontline avoiding the region, the energy industry faces a precarious moment. While the Strait remains open for now, the combination of navigational chaos, sanctioned tankers, and an uncertain ceasefire keeps markets on high alert.

The bottom line for investors is that the geopolitical price feature for oil has been factored into the pricing, and we can expect less volatility in oil pricing. In the last two weeks, we have seen three tankers on fire in the area from collisions or accidents around GPS spoofing. This had had a minimal impact on the global pricing, and as we have talked about on the podcast, Iran’s leadership would have to be in the death throes of a regime change to close the Strait, as it would be the end of the Iranian regime by force. We are praying for peace and a regime change by the Iranian people for the Iranian people. Peace is possible.

For the pricing matrices and models that used to work, we should be at about $75 to $85 per barrel to meet standard decline curves and reinvest in the development of oil and gas commodities. As molecule demand changes, we will see higher natural gas and LNG prices, as oil and gas Exploration companies will follow the money. We can expect to see huge demand for LNG and natural gas over the next several decades.

As Energy News Beat continues to monitor developments, one thing is clear: the world’s energy lifeline is under strain, and the risks are far from resolved. Being at the intersection of Energy, oil, gas, and investing, we have a lot of fun trying to connect the dots.

Sources: ZeroHedge, Reuters, gCaptain, Windward, U.S. Energy Information Administration, CNBC, BBC, Bloomberg.