Vessels crossing through the Strait of Hormuz face uncertainty and safety concerns even as the Trump administration negotiates peace with Iran.
The Trump administration has reached a preliminary agreement with Iran to end the war in the Middle East, but the shipping industry remains hesitant about prospects for transiting the strait, which has been mostly closed since the war with Iran started in late February.
“Despite the signing of the ceasefire agreement, we believe the security situation for the shipping industry remains volatile,” said Jakob Larsen, chief safety and security officer at the Baltic and International Maritime Council, which represents shipowners.
The Strait of Hormuz is a key trading route for oil products. Before the war, nearly 20 million barrels of crude oil and other products passed through the waterway daily, equivalent to 20% of global oil demand.
The preliminary agreement signed earlier this week opened the strait in theory, but a few key considerations are preventing ships from passing through freely.
One is the possibility of tolls imposed by Iran. Tehran has said it will allow ships to move through the waterway toll-free during the 60 days of negotiations provided for in the memorandum of understanding signed with the United States. But Iran will hold talks with Oman and the Persian Gulf states on how to administer the waterway after that time frame.
More immediately, Iran has imposed conditions on ships passing through the strait. The Persian Gulf Strait Authority said on its website that ships need insurance to transit. The policy is free for now, but it could involve a fee after the 60-day window closes. Iran has also said ships need to follow a certain route along Oman’s coast, according to Bloomberg.
Some outlets reported earlier on Friday that the Islamic Revolutionary Guard Corps sent out a radio broadcast announcing the re-closure of the strait following renewed fighting between Israel and the Iranian-backed terrorist organization Hezbollah in Lebanon. The broadcast reportedly warned that the strait would remain closed until Israel withdraws from Lebanon and the U.S. naval presence was removed from the Persian Gulf.
Larsen said shipowners need to be “reassured that transiting the Strait of Hormuz is not only permitted but also safe.”
Ian Ralby, a global maritime security expert and president of Auxilium Worldwide, told the Washington Examiner “the problem is that a lot of the insurance policies right now under the current war risk situation would be voided if the vessel goes through, so that’s been a hindrance to a lot of the well-regulated, well-managed companies even thinking of attempting to go through.”
“Insurance is actually very much a barrier, more than a facilitator right now,” he added.
It’s been reported that at least 20 oil tankers have crossed the trading route since the waterway reopened. Tanker traffic in the waterway on Thursday hit the highest level since June 2.
Mines planted by Iran are also a significant concern.
MORE THAN 12.5 MILLION BARRELS OF OIL CROSSED STRAIT OF HORMUZ OVERNIGHT, VANCE SAYS
“Due to the risk of congestion and navigational incidents in the inshore traffic zones, we still consider it risky for ships to commence transits at this point and advise shipowners to continue doing thorough risk assessments and appeal to all parties to put the safety of seafarers first,” Larsen said.
Larsen said the preliminary agreement does not provide sufficient information on safe routes for ships, measures to manage traffic, and the sequencing of ship departures from the waterway.
