Although the Strait of Hormuz saw a substantial increase in oil flow over the past weekend, with tankers moving about 20 million barrels of crude from Friday to Sunday, more than 400 large ships, including 250 tankers and 330 cargo ships, remain halted outside the strait. This hesitation reflects ongoing uncertainty among shippers even after a US-Iran agreement to end the conflict and aims to reopen the waterway.
Several impediments are preventing a full return to pre-conflict shipping levels. Iran's Persian Gulf Strait Authority has introduced new bureaucratic measures, including requiring permits and insurance coverage. There are also significant concerns about naval mines reportedly placed by Iran throughout the route. Furthermore, while Iranian officials have stated they won't impose tolls for 60 days, insurance might involve a fee afterward, adding to operational costs and complexity.
The situation is further complicated by the emergence of two potential shipping corridors: a northern one closer to Iran, and a southern one near Omani waters, which could be coordinated by the United States for safer transit. This divergence could lead to a less efficient system than before the conflict. Industry experts anticipate a gradual ramp-up rather than an immediate return to normal, with some global shipping lines suggesting full service restoration could take six to eight weeks after initial reopening. Crude oil prices reflected this uncertainty on Monday, with Brent crude falling over 3% to under $78 per barrel and West Texas Intermediate dropping 2.5% to under $74.
