Admiralty Dark Thirty: How Chokepoints, Warzones, Fraudulent Registries, and Sanctions Impact Global Maritime Trade
For regular maritime industry insiders and insurers observing the fallout of the recent developments in the Middle East, these events serve as a powerful reminder that remaining flexible and responsive is key when considering how to react to the ever-changing circumstances of global shipping.
Global maritime trade and marine insurers face fast‑moving risks—from chokepoints like the Bab al‑Mandab and the Strait of Hormuz to sanctions complexity and the rise of the ‘dark fleet’—that demand agility, compliance, and due diligence.
Chokepoints and War Zones Disrupting Maritime Trade
The fallout from the United States’s attack on Iran cannot be overstated, especially from the perspective of international maritime trade. When trade vessels enter or exit the Persian Gulf, one of the world’s largest maritime oil and gas locations, they must pass through the Strait of Hormuz. The Strait of Hormuz is approximately 30 miles wide at its most narrow. The tight passage is nestled between Iran and the Omani Musandam Peninsula. Approximately one quarter of the global seaborn oil and over 20% of global liquefied natural gas passed through the Strait of Hormuz in 2025.
In strikingly similar circumstances to the Strait of Hormuz remains the persistent issue plaguing maritime commerce in the Bab al-Mandab Strait. The Bab al-Mandab Strait is a 15-mile-wide passage at the southern end of the Red Sea between Yemen and Djibouti. Since late November 2023, the Houthis began intensified attacks on commercial vessels in the Bab al-Mandab Strait. Prior to 2024, approximately 15% of all global trade passed through the Bab al-Mandab.
These developments have had a significant impact on the global maritime industry, especially oil and gas shipments. Careful attention should be given to the existing frameworks that govern how entities respond to these events such as applicable charter parties, insurance policies, and internal policies and procedures. However, it is also essential that prospective policies or contracts incorporate these events to reflect up to date considerations of risk transfer, existing liabilities, and potential exposures. Any maritime business or insurer that continues to operate on yesterday’s market leaves behind invaluable competitive advantages and creates potential exposures and liabilities that could otherwise be avoided through careful strategic analysis of business and contractual relationships and decisions.
Fraudulent Registries and Ship Registration Compliance
When a vessel owner registers a vessel to a nation that it does not truly have any “genuine link” to, this is considered to be a fraudulent registration. This is often done to avoid sanctions, both from the United Nations and individual nation-states, and/or to avoid vessel and flag classifications. Although the United Conventions of the Law of the Sea requires that the state granting nationality to a vessel must have some connection to the approved vessel, there is no definition or guidance on what a genuine link consists of. Therefore, registrations are sometime abused with the illicit purpose of avoiding certain legal requirements or ramifications.
It is imperative for any party involved to be familiar with the applicable domestic and international laws governing ship registration compliance. Non-compliance with these laws or having dealings with a party that is found to be in violation of such laws risks not only the current economic ramifications of delays and potential sanctions, but also, the reputational impact of being associated with a vessel or entity that does not comply with registration laws. Due to the negative associations that can develop from associating with an entity that appears to skirt registration laws, failing to conduct proper due diligence can have a significant impact on a company’s reputation.
Sanctions, Due Diligence, and the Dark Fleet
As with all things in maritime defense, international developments are often the catalyst that dictate the dynamics of how insurers and industry insiders engage with various nation-states. Sanctions are nothing new to those even superficially involved in maritime commerce. However, the Russian-Ukraine war and the various conflicts in the Middle East have brought the topic of sanctions to prime-time national attention. Insurers and brokers have legal and regulatory obligations to ensure their policies and practices do not violate domestic or international sanctions.
The frequent dilemma when responding to issues involving sanctions is the need for thorough due diligence while also responding quickly to the ever-evolving sanctions landscape. The complexity of sanctions and contractual arrangements requires continuous study and updating to keep an effected insurer or business current on compliance obligations. Further, investment in high quality sanctions checking and vessel tracking software can assist insurers in staying compliant with evolving sanctions.
Finally, insurers and maritime insiders must remain vigilant in case potential issues involving the “dark fleet” arise. The “dark fleet” represents a network of vessels operating outside global regulations to transport sanctioned goods or to engage in commerce to avoid nation specific regulations or sanctions. Insurers and business interest must work together in order to address this growing threat. All involved parties should check vessel details and monitor the red flags that could suggest you are dealing with a potential dark fleet. Those with detailed knowledge of maritime logistics can use a vessel’s tracking software to highlight suspicious routing, anchoring, or “going dark,” and ultimately expose or avoid contact with the “dark fleet.”
Key Takeaways: Illuminating an Often Dark and Complex Set of Challenges
- Staying Informed: In the area of global trade, information can be one of the most powerful commodities. Staying up to date on global developments in key maritime hotspots allows for proactive rather than reactive steps to be taken in response to potential complications.
- Practicing Persistent Due Diligence: when the potential exposure and fallout from engaging with bad actors who use fraudulent registries or “dark fleet” practices is so high, comprehensive and continuous due diligence should be a standard practice.
Disclaimer: This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between Galloway and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material, which may be considered attorney advertising in some jurisdictions.
