A U.S.-Iran deal intended to reopen the Strait of Hormuz within days has left many of the world¡¯s top shipowners, traders and oil producer nations seeking clarity about the terms of the pact that¡¯s pivotal to the global economy.
Some Persian Gulf energy officials said they were inundated with inquiries from buyers about whether they can now get oil out through the waterway. Shipping executives and traders said they need details on what the deal will mean before they can commit to transiting again.
While U.S. President Donald Trump has posted on social media that ships are starting to move through the strait, there are still urgent questions to answer. A senior U.S. government official warns that mines will need to be removed, and cautions that, while traffic should soon pick up significantly, a return to pre-conflict transits will take longer than a few weeks as some owners take a caution-first approach. The deal is due to be signed Friday.
Despite the uncertainty, one important detail is that both sides appear to have agreed that there will be a 60-day period in which ships will be able to pass without tolls ¡ª even if what comes after that is unclear. News of the agreement drove Brent oil futures down almost 5%.
As well as the question of mines, uncertainties include whether ships will need to report to authorities in the region, who will oversee safety, and whether both the U.S. and Iran will give clear and unambiguous assurances that shipping is safe.
¡°From the bridge and the engine room where we¡¯re sitting, right now it looks very different to what the headlines may say,¡± said Angad Banga, chief executive officer of maritime conglomerate The Caravel Group, which owns Fleet Management Limited, one of the world¡¯s largest ship management companies. It presently has several crews trapped in the Persian Gulf. ¡°We¡¯ve seen positive signals before, and I think ultimately what matters is what holds.¡±
Future administration of ¡°navigation services¡± in the strait will be determined by Iran and Oman, Iran¡¯s semi-official Fars News Agency reported.
Shipping flows through the Strait of Hormuz remain significantly down compared to prewar levels, though a growing number of oil tankers and other ships have been transiting the waterway under the cover of darkness in recent weeks. Those flows have emerged thanks to a U.S. scheme to help ships navigate by hugging the coast of Oman. After the deal with Iran was announced, many shipping executives still said they would adopt a wait-and-see approach before resuming transits, citing previous false dawns and the risk posed by mines.
BIMCO, the top trade group for owners, said it¡¯s important to understand what the safe routes are, that mines are cleared, and that there must be ¡°credible assurances¡± from both Iran and the U.S. before traffic will return to pre-conflict levels.
That uncertainty, combined with the number of ships that need to get through, means it will take time for the Persian Gulf to be cleared of ships that in some cases have been stuck there since the start of the conflict on Feb. 28.
Mitsui OSK Lines said close coordination with governments and insurance firms would be essential before it could send ships through the strait again, while Nippon Yusen KK said a normalization of traffic hinges on what¡¯s being laid out in the agreement. Container giant A.P. Moller-Maersk A/S said it¡¯s too early to assess how an interim peace agreement would impact its operations.
Another U.S. official said there¡¯s already a substantial increase in traffic, that they expect a normalization within 30 days, and that there should be 40 to 50 transits just on the Omani route by Friday.
There was little visible ship activity in Hormuz in the hours after the news.
A liquefied natural gas tanker, the Disha, headed toward the Gulf of Oman. An oil supertanker, sanctioned for its role in moving Iranian barrels, moved toward the Persian Gulf.
¡°Shipowners are on a risk spectrum ¡ª the Japanese, Koreans and Chinese are less open to high risk, while the Greeks have a different appetite ¡ª so we may see some people gearing up,¡± said Anoop Singh, global head of shipping research at Oil Brokerage Ltd. ¡°But by and large the rest of the market is still seeking more details and assurance before proceeding.¡±
Observed traffic through the strait has slowed dramatically since U.S. and Israeli strikes began at the end of February, sinking to a fraction of a prewar average of about 135 transits daily. Some oil and gas producers have found workarounds to send tankers through, at times with support from the U.S. or through government-to-government negotiations, but total crossings remain way down.
Out of the hundreds of vessels idling in the Persian Gulf, nearly 300 are loaded and waiting to cross at a moment¡¯s notice ¡ª with around the same number empty on the other side in the Gulf of Oman, waiting to head back to major export terminals, according to Muyu Xu, a senior crude oil analyst at commodity intelligence firm Kpler. Around 250 are ballasting in the Persian Gulf, primed to also start picking up cargoes for any potential outbound journeys.
That exact count of observed vessels may change as ships that have turned off their transponders restart transmission. Electronic interference that has complicated tracking in the area over the past month should also ease.
In theory, even a temporary peace deal should release millions of barrels of oil that have been trapped for months in the Persian Gulf. In practice, there will still be a long list of impediments ¡ª including prosaic problems like the need to remove barnacles from ship hulls, and to ensure crews are in position and prepared to sail.
For now, though, security remains the primary concern, as purported deals over the past months have ended with Iranian forces firing at ships or seizing vessels.
Fars reported that once the 60 days of free transits are over, Iran will begin charging for safety, navigation, environmental and insurance services. It will work alongside Oman to coordinate traffic, the news agency said.
One U.S. official said the strait may then operate under alternatives to the prewar, toll-free status quo, without elaborating. Another U.S. official said the U.S. position is no tolls.
Trump, speaking to reporters at the Group of Seven summit in France, insisted that the strait would be clear for traffic. ¡°We have a lot of lanes right now already,¡± he said as he sat alongside French President Emmanuel Macron.
Managing a vastly increased flow of traffic through the waterway will be another headache, even once other worries ease.
The strait¡¯s narrow width ¡ª only 39 kilometers wide at its tightest point, with shipping lanes in each direction merely 3.2 kilometers wide ¡ª raises the risks of vessels colliding if they begin rushing for the exit. The picture is complicated by the fact that electronic interference and irregular use of transponders may misrepresent true locations.
¡°They say the strait is open, but do I report to CENTCOM or do I liaise with Iran ¡ª and is it okay to liaise with Iran, because so far they¡¯ve said anyone who pays a penny to Iran faces sanctions,¡± said Pankaj Khanna, CEO of Heidmar Maritime Holdings Corp. ¡°I wouldn¡¯t transit the old Traffic Separation Scheme at the moment because it¡¯s mined, so how can I go in without assurance? Some people will take risk and others won¡¯t.¡±
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