Oil flow through the Strait of Hormuz has recently reached its fastest pace since the Iran war began, with approximately 20 million barrels of crude passing through the waterway from Friday to Sunday, according to tanker-tracking data compiled by Bloomberg. This marks the highest transparent flow observed since before the war started in late February. Iran itself also pushed 6 million barrels through the morning of June 22. This surge in traffic comes despite Tehran's previous assertions that the strait was shut and ongoing reports of the Islamic Republic harassing passing vessels.
However, the situation remains complex and uncertain. A UN agency recently paused the evacuation of ships through the Strait of Hormuz after a vessel was hit by a projectile off Oman's coast, following Iran's threats against ships using alternative routes. While traffic has increased, it remains below pre-war levels, which averaged 100-130 vessels daily. The International Maritime Organization's secretary-general has stated that the evacuation plan is on hold until safety guarantees can be confirmed. Additionally, Iran has threatened vessels attempting to use a U.N.-backed alternative route without its permission.
The operational status of the Strait has been termed the "Strait of Schrodinger," reflecting the ambiguity of whether it is truly open or closed. While physical passage may occur, reliable observation and tracking of vessels are compromised due to issues like GNSS spoofing, impacting insurance and sanctions compliance. Iran has also introduced obligatory insurance for vessels traversing the Strait, to be provided by the newly established Persian Gulf Strait Authority. While initially free, the Authority reserves the right to introduce fees in the future, a move that President Trump has branded "unacceptable" and a potential "red line issue" for the U.S. in negotiations with Iran.
The future administration and maritime services of the Strait are under discussion between Iran, Oman, and six other Gulf states following an interim deal. Legal experts and maritime associations argue that a broad toll regime would violate international maritime law, specifically the right of unimpeded "transit passage." While the U.S. and Iran agreed to a 60-day period without tolls as part of a provisional framework, the long-term imposition of fees remains a significant point of contention that could hinder a lasting peace deal and the return of commodity flows to pre-war levels.
