Over the past month, U.S. President Donald Trump’s shifting approach toward Iran has spurred notable turbulence across the global financial markets. The impact has strongly rippled into the cryptocurrency sector as well, where volatile price swings have left investors facing an ever-deepening sense of uncertainty about what lies ahead.
Strait of Hormuz crisis triggers emergency stock release
Following escalating hostilities between Iran and other regional actors, shipping through the strategic Strait of Hormuz—one of the world’s most critical energy choke points—dropped sharply. As this strait handles nearly one-fifth of all maritime oil trade worldwide, Iran’s announcement that it would close the waterway “indefinitely” quickly ratcheted up perceived risks in the global energy market.
After the conflict broke out on February 28, oil tanker movements through the strait slowed to nearly a standstill. In response, the International Energy Agency (IEA) coordinated an unprecedented release from emergency oil reserves, mobilizing about 400 million barrels from its 32 member nations. With additional countries joining the effort soon after, the total available emergency supply rose to 426 million barrels.
These extra reserves are now acting as a vital buffer, offsetting the daily shortfall of 4.5 to 5 million barrels created by the restricted flow from Hormuz. However, analysts caution that such reserves could only balance supply and demand for a few weeks. Without normalization of strait traffic, the daily deficit is expected to double, potentially reaching up to 10 or 11 million barrels per day.
Shockwaves in markets and cryptocurrencies
The immediate risk to oil supply has created an atmosphere where sharp sell-offs of riskier assets might occur at any time. Saudi officials have noted that the current shock to oil supply is unprecedented and that the market’s absorptive capacity is all but exhausted.
“There’s no longer a viable equilibrium for absorbing a shock of this magnitude,” they emphasized.
The turmoil sent insurance premiums for vessels in the region soaring. While pre-conflict premiums hovered below 1% of a ship’s value, rates in some instances shot up to 7.5%. For example, insuring a $100 million tanker—which previously cost around $250,000—now can require between $2 and $3 million in premiums during ongoing hostilities.
Insurance costs have become the market’s clearest reflection of risk on these routes. Unless premiums drop below 2%, instability in the region is expected to continue affecting financial markets worldwide.
While President Trump has occasionally insisted that safe passage through the Strait of Hormuz can be guaranteed, no meaningful rebound in tanker traffic has yet been documented. According to S&P Global Market Intelligence, the number of daily tanker transits plummeted from over 100 prior to hostilities to just 21 thereafter.
Analysts stress that a significant improvement in marine traffic is essential for a return of risk appetite in global markets. In the meantime, both cryptocurrency and traditional financial markets are expected to remain volatile amid persistent uncertainty.
