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🇮🇱 Israel /Energy & Infrastructure

Shippers remain cautious on Strait of Hormuz transit after US, Iran agree deal

From Jerusalem Post · () English

Summarized and contextualized by DistantNews.

At a glance

News From a news agency New plan
  • Shippers are cautious about resuming transit through the Strait of Hormuz despite a framework deal between the US and Iran.
  • Global oil prices fell about 4% following the announcement of the potential reopening of the waterway.
  • Confidence may take weeks to rebuild, with owners and charterers awaiting details on safety and mine clearance.

Shippers are adopting a wait-and-see approach regarding the resumption of transit through the Strait of Hormuz, even after US and Iran officials announced an agreement on a framework deal to reopen the vital waterway. Global oil prices saw a drop of approximately 4% on Monday in reaction to the news.

Analysts at Sentosa Ship Brokers noted that while the market is pricing in a return to normal operations, "owners and charterers alike will likely remain cautious until ships are consistently moving freely through Hormuz once again." This caution stems from months of disruption caused by the US-Israeli war with Iran, which began on February 28 and significantly impacted shipping through the strait, a critical route for about a fifth of the world's oil and liquefied natural gas.

The market is clearly pricing in a return to business as usual, but after months of disruption, (ship) owners and charterers alike will likely remain cautious until ships are consistently moving freely through Hormuz once again.

— analysts at Sentosa Ship BrokersCommentary on shipper confidence following the US-Iran deal to reopen the Strait of Hormuz.

Details regarding safety assurances and mine clearance in the strait are still awaited. India's Petronet successfully navigated the LNG tanker Disha through the strait on Monday, marking the only visible shipment so far according to tracking data. However, this isolated transit does not yet signal a full return to normal operations.

We expect free passages will have to be built over the weeks for the wider shipping community to gain confidence.

— Anoop SinghOil Brokerage's global head of shipping research, on rebuilding confidence in Strait of Hormuz transit.

An estimated 155 tankers carrying oil and chemicals remain in the Mideast Gulf area, down from 201 at the end of May. Oil Brokerage estimates the number of tankers at 215. "We expect free passages will have to be built over the weeks for the wider shipping community to gain confidence," said Anoop Singh, Oil Brokerage's global head of shipping research. He added that physical freight rates are likely to remain elevated, and trading slow, until unrestricted navigation is assured.

The Japanese Shipowners' Association welcomed the peace agreement but is waiting for more concrete information, particularly concerning reports of mines being laid in the area. The US-Iran pact is expected to be signed on June 19.

wait a little longer for more concrete information

— spokesperson for the Japanese Shipowners' AssociationRegarding the US-Iran pact to reopen the Strait of Hormuz.
DistantNews Editorial

Originally published by Jerusalem Post. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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