The Strait of Hormuz is effectively closed. Since the beginning of the conflict involving the United States, Israel and Iran on Feb. 28, 2026, oil tanker traffic through the world’s most critical oil shipping choke point has collapsed, dropping by more than 90%.
Iran has threatened to destroy any ships, including oil tankers, that pass through the strait from the oil depots of the Persian Gulf to the Arabian Sea and the rest of the world. Companies that insure ships against the risks of traveling in war zones are deciding whether to issue coverage on an individual-ship basis. The international body that sets many shipping regulations has told ships’ crews that they have the right to refuse to sail into the area.
As of March 6, more than 400 tankers were stranded in the Persian Gulf, without permission from their owners to move.
But some vessels are still transiting the strait. Most of the ships still moving are those that operate outside the rules.
In maritime circles, these vessels are called the “shadow fleet.” They are vessels that ignore international restrictions on trade with certain countries, violate anti-pollution regulations, smuggle unauthorized goods or don’t want their cargo or activities too closely monitored.
They exist, even in a world filled with electronic tracking, because the world’s oceans aren’t governed the same way the land is. On land, armed personnel closely monitor carefully delineated borders, seeking to force everyone to follow clear rules. But at sea, regulation is almost the opposite. The system that governs international shipping is, at its foundation, voluntary.
The tracking of ships is voluntary. The International Convention for the Safety of Life at Sea – signed by 167 countries – requires almost every commercial vessel to carry a radio transponder that broadcasts the ship’s identity, position, speed and heading to port authorities, coast guards and commercial tracking networks.
That international agreement, which is enforced by individual countries, requires ships to leave the transponders on and active. But there is no physical mechanism preventing a crew from switching it off or broadcasting a false position.
When a vessel turns off its transponder and goes dark, it doesn’t trigger an alarm at some global maritime headquarters. There is no such headquarters. The ship simply disappears from the map. Every map.
National jurisdiction is a matter of preference, not law. Every vessel sails under the flag of a nation, and that nation is theoretically responsible for regulating and inspecting it. But in practice, a ship’s registration in a particular country is a commercial transaction. Many law-abiding shipping companies make this business decision, but this system leaves an opening for those who seek to skirt the rules.
A ship owned by a shell company in the United Arab Emirates can register under the flag of Cameroon, Palau or Liberia, or any country that may lack the resources or the incentive to conduct real inspections. Even landlocked Mongolia has a registry of oceangoing ships flying its flag.
When a vessel comes under scrutiny from port inspectors or coast guards, it can simply reregister under a different flag. Some registries even offer online registration. If the new registration is fraudulent or the registry doesn’t actually exist, the vessel effectively becomes stateless.
Then there is insurance, which is the closest thing the maritime system has to a real enforcement mechanism. Mainstream insurers, mostly based in London, require vessels to meet safety standards, carry proper documentation and comply with international trade sanctions. A ship without insurance coverage cannot easily enter major ports or secure cargo contracts with reputable firms. Those restrictions are precisely what froze so many law-abiding ships in the Persian Gulf when war broke out.
But companies can avoid those rules, too. Two-thirds of ships carrying Russian oil – the trade of which is restricted by the U.S. and other countries – reportedly have “unknown” insurance providers, meaning nobody knows whom to call to cover the cleanup costs after a spill or collision. The enforcement mechanism works until ship owners realize they can just opt out of it entirely, using less reputable ports or transferring oil from ship to ship out at sea.
