Ship movements remain far below normal despite ceasefire, as oil prices climb and uncertainty clouds outcome of high-stakes US-Iran negotiations.
- +Strait Of Hormuz Traffic Crawls As US-Iran Begin Negotiations
Ship traffic through the Strait of Hormuz stood at well below 10 percent of normal volumes on Thursday despite a US-Iran ceasefire, as Tehran asserted its control by warning ships to report to its authorities while doing so.
Ship traffic through the Strait of Hormuz stood at well below 10 percent of normal volumes on Thursday despite a US-Iran ceasefire, as Tehran asserted its control by warning ships to report to its authorities while doing so.
Hundreds of tankers and other ships have been stuck inside the Gulf since the Iran war began on February 28, cutting global oil supply by 20 per cent in the world’s biggest-ever supply disruption. Prices for some physical oil grades hit new highs on Thursday as the crisis showed little signs of abating.
Just seven ships had passed through the strait in the past 24 hours as of on Thursday versus about 140 normally, ship-tracking data showed. They included one oil products tanker and six dry bulk carriers, data from Kpler, Lloyd’s List Intelligence and Signal Ocean showed.
A chemical tanker was set to cross destined for India, ship-tracking data on the MarineTraffic and Pole Star Global platforms showed, as reported by Reuters.
“Most shipping lines are likely to remain cautious, and two weeks will not be enough to clear the backlog even if there is a marked increase in traffic,” said Torbjorn Soltvedt at risk intelligence company Verisk Maplecroft.
It came as Iran agreed to a two-week ceasefire with the United States, with its National Security Council saying talks with Washington will begin in the Pakistani capital, Islamabad, on Friday (today), based on Tehran’s 10-point proposal.
The statement was disclosed after Trump said he was holding off on a threat to end Iranian civilisation and would “suspend” attacks on the country for two weeks.
Iran’s Islamic Revolutionary Guard Corps (IRGC) has told vessels to sail through Iranian waters around Larak Island to avoid the risk of naval mines in the usual lanes through the strait, Iran’s semi-official Tasnim news agency reported on Thursday.
Media reports have suggested that Iran might want to charge a toll for ships passing through, some pinning the figure at $2 million, and ship-tracking data has shown some vessels are already taking the unusual route around Larak Island.
Also, oil prices rose over 3 per cent on Thursday as doubts over a fragile two-week Middle East ceasefire raised concerns that energy flows through the crucial Strait of Hormuz will remain restricted, with shippers hesitant to resume transit.
Brent crude futures were up $3.41, or 3.6 per cent, at $98.16 a barrel, while US West Texas Intermediate (WTI) crude rose $4.74, or 5 per cent, to $99.15 a barrel.
Both benchmarks fell below $100 per barrel in the previous trading session, with WTI recording its biggest decline since April 2020, on optimism the ceasefire would result in a reopening of the strait.
However, Israel bombed more targets in Lebanon yesterday, putting the ceasefire in further jeopardy after its biggest attacks of the war on its neighbour killed more than 250 people and threatened to torpedo Donald Trump’s truce from the outset.
Market participants were unwilling to fully strip out the geopolitical risk premium, analysts said, adding there was no clarity on what US-Iran talks would mean for oil flows.
Meanwhile, Donald Trump is considering withdrawing some US troops from Europe amid dismay over NATO allies’ failure to help secure the Strait of Hormuz, according to a report in Reuters.
The US president has discussed the option – which would be a significant move demonstrating the growing strain in transatlantic relations – with his advisors, a senior White House official said.
More than 80,000 troops are currently stationed in Europe, more than 30,000 of which are located in Germany, with sizeable numbers also stationed in Italy, the United Kingdom and Spain.
Israeli Prime Minister Benjamin Netanyahu has said Israel will begin peace talks with Lebanon “as soon as possible” after the military launched a ferocious wave of strikes on Wednesday that killed 303.
He said the negotiations will focus on disarming Iran-aligned militant group Hezbollah, and on establishing peaceful relations between the two countries.
