Strait of Hormuz Reopening Delayed; 500 Ships Stuck in Persian Gulf

Even with a reported agreement between the United States and Iran to reopen the vital Strait of Hormuz, a backlog of around 500 merchant ships currently stuck in the Persian Gulf will likely take weeks to clear. Analysts caution that the recovery of oil transportation will be a slow process, and the crucial energy corridor remains vulnerable to future disruptions.

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The oil market will continue to be tight until 2027, even under the most optimistic scenario, because it takes time to restore shipping logistics, repair damaged energy infrastructure, and rebuild depleted oil inventories.

The agreement, announced by U.S. President Donald Trump, stipulates that Iran must clear mines within the strait and refrain from charging passage fees. In return, the U.S. is expected to lift its naval blockade on Iranian ports. This development led to a subsequent drop in international oil prices.

Industry assessments indicate that the strait's traffic has significantly decreased since the conflict began over three months ago. The Strait of Hormuz normally handles about one-fifth of the world's oil trade. Even with passage resumed, the sheer volume of ships means that clearing the backlog will be a gradual undertaking. Additional complexities arise if ships must navigate under restricted conditions or adhere to unified dispatch protocols, further slowing the process.

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Given that retaliatory attacks continue to occur even during the current ceasefire, I am pessimistic about the stability of any agreement.

Major shipping organizations, including the International Chamber of Shipping and Bimco, have issued guidance to shipowners, warning of potential congestion and chaos if numerous vessels attempt to pass simultaneously and without order. Naval vessels from the UK and other European nations are gathering in the Mediterranean to assist with mine-clearing operations. Martin Kelly, a consultant at risk advisory firm EOS Risk Group, expressed pessimism about the durability of any agreement, citing ongoing retaliatory attacks during the ceasefire period. Helima Croft, global head of commodity strategy at RBC Capital Markets, noted that due to vessel scheduling and logistical requirements, it will take considerable time to restore even partial capacity, even after the strait reopens.

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Due to vessel scheduling and logistical operations, it will take several weeks for capacity to be restored, even after the strait reopens.