Shipowners and traders are approaching with caution a US-Iran deal that aims to reopen the Strait of Hormuz within days. While the prospect of ending a double blockade initially cheered oil futures, with Brent crude down almost 5% on Monday, industry participants are seeking more details to assess the safety and practicality of transits. The waterway has seen traffic slow dramatically since US and Israeli strikes began in late February, falling from an average of 135 daily transits to a fraction of that, with some oil and gas producers using workarounds with US support or government-to-government negotiations.
Nearly 600 vessels are currently either loaded and waiting to cross, or empty and on the other side of the strait, ready to return. Specifically, data from Kpler indicates that 98 crude tankers and 88 carriers lifting dirty petroleum products are among the hundreds of vessels stuck inside the Persian Gulf. An additional 300 empty vessels are waiting in the Gulf of Oman. Major Japanese shipping companies like Mitsui OSK Lines and Nippon Yusen KK have stated that safe navigation hinges on finalizing details and close coordination with governments and insurance firms.
Despite President Donald Trump's declaration that the strait will reopen on Friday, European allies at the G7 summit expressed skepticism that trade could fully resume by the weekend, citing the need for de-mining and agreement on navigation rights. Practical impediments include removing barnacles from ship hulls, ensuring crews are in place without electronic navigation signals, and addressing potential congestion and collision risks. Security also remains a major concern, given past instances of Iranian forces firing on or seizing ships, and the uncertainty surrounding mines in the strait, which impacts insurance coverage. The agreement's details, particularly regarding free navigation, are still subject to interpretation and negotiation.
