Despite a preliminary agreement between the United States and Iran aimed at reopening the crucial Strait of Hormuz,shipping activity remains stagnant in the vital waterway. Following the announcement by US President Donald Trump on Sunday,oil prices dropped,but only handful of vessels have navigated the strait since the deal was made public.
Data from marine tracking services indicates that just seven ships have passed through the strait since the announcement,including a few Iranian oil tankers that managed to breach the US blockade. Meanwhile, over 550 vessels continue to wait on either side,hesitant to enter the waters that once saw daily traffic of 120 to 140 ships,half of which were oil tankers carrying around 20 million barrels of oil.
Concerns about safety and stability are keeping shipping operators and insurers at bay. The recent history of missile exchanges and drone attacks in the region has heightened fears of renewed hostilities. Just last week, US military engaged commercial vessels,resulting in casualties among sailors. This ongoing tension has left many in shipping industry skeptical about the safety of transit through the strait.
Analysts suggest that a significant period of stability is necessary before normal shipping operations can resume. Haider Anjum, a senior equity analyst at Jyske Bank,emphasized that shipowners require a sustained lack of incidents to feel secure enough to resume operations. He estimates that it could take around four months for the situation to stabilize sufficiently .
The threat of underwater mines adds another layer of complexity. While US has claimed that mines pose a risk in the strait,the Iranian government has not confirmed any mining activities. Nevertheless,the mere possibility of mines is enough to deter shipping,as insurance companies are unwilling to cover the associated risks. Anjum noted that establishing a verified mine-free corridor could take approximately two months.
In addition to safety concerns, potential for tolls on shipping has emerged as a contentious issue. Historically, transit through the Strait of Hormuz has been free, but Iran has indicated that it may begin charging fees for coordinating safe passage. This has drawn opposition from the US and Gulf Cooperation Council (GCC) countries, who argue that such charges violate international navigation laws . Nader Habibi, an Iranian-American economist, pointed out that while Iran claims it will not impose tolls, it is likely to demand fees for its services in ensuring safe transit.
Insurance remains a significant barrier to resuming shipping operations. War-risk premiums have skyrocketed since the onset of hostilities,making it financially unfeasible for many shipping companies to operate in the region. Although these premiums have decreased from their peak, they remain elevated compared to pre-crisis levels. Habibi noted that uncertainty surrounding durability of the peace agreement will continue to challenge shipping companies,as high insurance rates are likely to persist .
As the situation unfolds,the future of shipping through the Strait of Hormuz hangs in the balance. Until tangible improvements in security and stability are observed, many operators will likely remain cautious,preferring to wait and watch from a distance.
