Strait of Hormuz Still Throttled After Ceasefire, Keeping Gulf Business in Crisis Mode

Executive Summary

The dominant business story this week was not fresh kinetic escalation, but the slow, risk-priced restart after the Iran–Gulf ceasefire: despite Iran signaling conditional reopening, ship movement through the Strait of Hormuz remained far below normal, leaving large volumes of energy cargo waiting and extending disruption into Q2.

Governments kept severe travel risk postures (including "do not travel" advisories and embassy constraints), reflecting the view that the ceasefire has not yet restored reliable aviation or consular operating conditions.

On the infrastructure side, Saudi Arabia reported suspending operations at multiple refining and upstream/transport assets after Iranian attacks, underscoring that physical capacity may remain constrained even if frontline activity cools.

Outside the Gulf, the Russia–Ukraine war continued to disrupt energy and trade logistics via drone attacks on Russian export terminals and repeated strikes on Ukrainian port/energy infrastructure.

Office Closures and Corporate Operations

Gulf: Operational Continuity Shifts from "Evacuate Now" to "Remote-First Until Risk Premiums Fall"

This week's corporate pattern in the Gulf was continued remote work and restricted on-site operations rather than newly announced mass evacuations, driven by ongoing airspace constraints, limited consular services, and uncertainty over maritime and aviation insurance availability.

Dubai's business environment showed measurable stress signals that typically correlate with workforce caution: reduced travel, delayed relocations, fewer business visitors. Property sales volumes were reported down nearly 30% month-on-month in March, and hotel occupancy in the week ending March 14 fell to 16% versus ~90% typical, with some luxury hotels discounting heavily.

What to watch next week: if the ceasefire holds and aviation authorities/insurers relax restrictions, expect a shift from blanket remote-work guidance toward phased office reopenings; if not, expect "remote-first" to harden into longer-duration distributed staffing for Gulf hubs.

Travel Advisories and Flight Disruptions

Government Advisories Maintain High Severity

The UK continued to advise against all travel to Iran and stated Iranian airspace remains closed, while also noting the UK has withdrawn staff from Iran and the embassy operates remotely.

Australia warned that conflict-driven airspace closures and fuel supply challenges are causing global travel disruptions and reiterated "do not travel" guidance (including applying that guidance to transit and layovers) for multiple Middle East destinations.

Australia's DFAT crisis hub reiterated that Australians wanting to leave should make plans to do so, and it listed registrations open for Australians in Bahrain, Iran, Israel, Kuwait, Lebanon, Qatar, and the UAE.

The U.S. State Department maintained a Worldwide Caution noting periodic airspace closures and urging increased caution, especially in the Middle East.

Airline Route Recovery: Partial Restarts but Uneven and Capacity-Constrained

Saudia announced a partial resumption of flights from Jeddah to Dubai (DXB), Abu Dhabi (AUH), and Amman (AMM) starting April 11, advising passengers to check status due to ongoing normalization and exceptional scheduling.

For global supply chains, logistics providers reported that Middle East airspace closures and carrier embargoes had extended transit times by 5–10+ days in some cases, illustrating how aviation disruption can persist even after kinetic activity slows.

Infrastructure Strikes Affecting Business

Energy Infrastructure: Saudi Capacity Disruptions Remain Key Macro Risk

Saudi Arabia reported suspending operations at several sites after Iranian attacks, including strikes affecting refining and export-linked infrastructure and production/transport losses tied to Manifa/Khurais and the East–West pipeline.

This matters for employers and consumer-facing businesses because refined-product scarcity (diesel/jet fuel) feeds into freight costs and travel prices.

Maritime Chokepoints: Hormuz Remains "Open in Theory, Throttled in Practice"

Even after the ceasefire, only a small number of vessels were observed traversing Hormuz on a given day, and restoring global shipping/energy flows to pre-conflict levels was expected to take months.

Industry sources reported that only seven ships passed through in a 24-hour period after Iran conditionally lifted its blockade, versus more than 130 ships per day pre-war, with Iran intending to restrict throughput to around a dozen vessels per day.

Insurance premiums and operator risk perceptions remain a binding constraint, including cited worst-case premiums of up to 3% of tanker value and single-tanker insurance costs as high as $7 million.

Ports and Commercial Nodes

Multiple incidents continued affecting commercial shipping and port operations, including a Maersk-chartered vessel struck in the Persian Gulf on April 7 and earlier disruptions at Port of Salalah, illustrating the operational fragility underpinning the slow normalization narrative.

Workforce Impacts

"Soft Closures": Remote Work, Reduced Shifts, and Tourism-Linked Labor Compression

This week's workforce signal in the Gulf was tourism and services contraction rather than formal mass layoffs: reports indicated hotel occupancy collapse and described operational responses including staffing reductions and sending staff home early at hospitality venues as demand dropped.

For expatriates and internationally mobile staff, Australia noted that embassies/consulates in Israel and the UAE remained closed and that non-essential officials had been directed to leave Israel, Lebanon, and the UAE, reflecting continued constraints on consular support and administrative processing.

Economic Ripple Effects

Energy: Disruptions Projected to Rise in April, with Inflation Transmission to Europe

The IEA's Fatih Birol said Middle East oil supply disruptions would rise in April (doubling March's losses) and begin impacting Europe via inflation and weaker growth, noting that IEA members agreed to a 400 million barrel release.

Birol also said more than 12 million barrels had been lost since the conflict began and that roughly 40 critical energy facilities in the Middle East had been damaged.

Real Estate, Tourism, and Local Demand

Dubai's March property and hospitality slump serves as a near-term proxy for business confidence and travel/relocation flows into the UAE, with reported month-on-month sales declines and severe occupancy compression after the conflict shock.

Supply Chains: Delays and Surcharges Persist Even as Ceasefire Headlines Calm Markets

Industry reports documented widespread rerouting, elevated surcharges (including conflict surcharges cited at $3,000/FEU by some carriers), and longer ocean transit times due to diversions, suggesting that "time-to-normal" for supply chains is meaningfully longer than "time-to-ceasefire".

Other Active Conflicts Affecting Business

Russia–Ukraine: Port and Energy Logistics Remain Under Attack

Russia's oil export terminals at Ust-Luga and Primorsk were unable to accept shipments for a second week after Ukrainian drone attacks, with Finnish maritime authorities noting shipments had fallen to "individual vessels" from a typical 40–50 per week.

A Russian drone attack damaged warehouses and quays at a Danube port in Ukraine's Odesa region and cut power to nearly 17,000 residents in the Izmail district, though the port remained operational.