For the second time in a month, carriers must decide whether passage through the Strait of Hormuz is safe after on-again, off-again peace talks, and one shipping analyst expects shipping lines to exercise caution.
Lars Jensen, president of consultancy firm Vespucci Maritime, said he expects carriers to exercise extreme caution when it comes to transits of the vital waterway where about 20% of global crude supply passes through.
“For shipping lines, the effect of these developments will be a very cautious approach to any new announcements of open passage through the Strait of Hormuz,” Jensen said. “Likely many will have a ‘let’s wait a while and see if it holds’ attitude – and consequently this will serve to further prolong a normalization of the situation even if a peace agreement is signed.”
Transits through the Strait have been essentially halted since late February when the US and Iran attacked Iran.
The closure has had less impact on container shipping as less than 2% of global container capacity passes through the strait each year but has contributed to higher rates mostly because of surging bunker fuel prices.
However, the closure has had a much greater impact on crude oil and chemical markets as around one-third of global seaborne crude flows and up to 20% of the world’s total oil flows pass through.
US President Donald Trump said over the weekend in a Truth Social post that he was initiating Project Freedom to assist trapped vessels in exiting the Persian Gulf.
After two days, Trump said in a social media post that Project Freedom will be paused for a short period of time to see whether a peace agreement could be finalized and signed.
According to the Strait of Hormuz tracker, a free, real-time dashboard that tracks the ongoing crisis using AI-powered analysis of current strait conditions, insurance markets and diplomatic developments using real-time web data and AIS data for vessel positions, three vessels have transited the strait over the past 24 hours.
The tracker shows 400 vessels waiting to transit the Strait.
Global crude oil prices fell on the news of the pause, but remain elevated, which has led to soaring bunker fuel prices for shippers.
Source: ICIS by Adam Yanelli
