Strait of Hormuz traffic recovery stalls after Iranian drone strikes

Shipping through the Strait of Hormuz has slowed again after fresh Iranian and US strikes. The renewed uncertainty has split vessel routes and kept traffic below prewar levels.

In Short

• Transit numbers remain well below prewar averages despite the waterway staying open
• Operators are split between Iranian, Omani and dark routes while risks persist
• Iran seeks crew and cargo details, and sometimes payments, from passing ships

Ship traffic through the Strait of Hormuz had begun to recover after an interim US-Iran deal, but that rebound has stalled after an Iranian drone hit a cargo ship using a route favoured by the US and Oman on June 25. The US then struck Iranian military facilities, more fighting followed, and the improvement in traffic slowed again.

The strait remains open, but the number of ships using it is still below prewar levels. Oil producers and markets had hoped passages would keep rising after traffic improved from less than 10 per cent of normal to about half of prewar averages, but uncertainty over how vessels should pass through the waterway has put that recovery on hold.

Tensions rose further after a second strike on Saturday hit a tanker carrying crude for Qatar’s state-run energy company, with Qatar playing a key role in contacts between Iran and the US. The US responded with a second round of strikes on Iranian ‘surveillance infrastructure, communication systems, air defence sites, drone storage facilities and minelayer capabilities’. Iran then launched drone and missile strikes on Kuwait and Bahrain on Sunday. After four days of exchanges, both sides appeared to pause their attacks on Monday.

At the centre of the dispute is Iran’s effort to assert control over the strait. Tehran wants ships to use a route near its coastline and has set up a vetting process to collect information on crews, destinations and cargoes. In some cases, it has also demanded payment. That has created a problem for shipowners because the Islamic Revolutionary Guard Corps, or IRGC, which is running the vetting process, is designated a terrorist organisation by the US and the EU, raising the risk of sanctions for those making payments. Many vessels had instead been using a southern route along Oman’s coast under a US overwatch operation using drones and aircraft. The cargo ship that was hit was using that southern route.

The US and Iran also differ on what their interim agreement means. US officials say the understanding was that the strait would reopen for 60 days without Iran collecting money from passing ships while a longer-term settlement was negotiated. Iran has pointed to language saying it ‘will make arrangements using its best efforts for the safe passage of commercial vessels’ during the negotiating period, arguing that this lets it decide how the strait reopens. The deal also says Iran will ‘conduct dialogue with the Sultanate of Oman to define the future administration and maritime services in the strait’. Before the June 25 strike, some operators had begun testing Iran’s position. According to S&P Global, 78 vessels crossed the strait the day before the attack, including at least five large oil tankers carrying up to 2 million barrels each. That was still below the prewar norm of 130 or more vessels a day.

Traffic has continued, though at a lower pace than before the first Iranian strike, and a humanitarian evacuation organised by the UN’s International Maritime Organisation remains suspended. Marine data firm Windward said there were 44 transits on Sunday, 24 inbound and 20 outbound, with the ‘strait open with no disruption to freedom of navigation despite ongoing military operations’. It added that ‘most traffic has shifted north under Iranian coordination’ and that ‘multiple’ sanctioned tankers crossed on Sunday. Windward also reported ‘elevated activity’ by IRGC speedboats, with around 60 of them patrolling in swarms around the US-overseen southern corridor. Ship tracker MarineTraffic.com said that of 108 crossings over the weekend, 39 used the US-backed Omani route, 37 used the Iranian route, 23 were unknown because they switched off their location systems and ran dark, and nine used a prewar route in the middle of the strait. ‘The split suggests operators are still assessing risk cautiously, rather than returning to pre-crisis traffic patterns,’ MarineTraffic.com said on X.

Even so, oil markets have stayed relatively calm. Brent crude, the international benchmark, rose 0.9 per cent on Friday to USD 72.67 at 1430 GMT, close to its last close before the war of USD 72.48. The International Energy Agency said several factors had helped ease pressure on prices: consumers cut energy use after fuel became costlier, member governments released oil from emergency stocks, Saudi Arabia and the United Arab Emirates expanded pipeline routes that bypass the strait, and supplies from other exporters, especially the US, increased. The agency also pointed to a 40 per cent drop in China’s oil imports between February and May as the country drew in part on its oil reserves. In the US, average petrol prices had fallen back below USD 4 per gallon to USD 3.86 on Monday.

International law experts cited in the report said Iran’s demand to control passage through the strait runs against the United Nations Convention on the Law of the Sea, which took effect in 1994 and requires coastal states to allow peaceful passage through their waters. The two sides are expected to use the 60-day period in the interim deal to try to reach a broader settlement covering the strait, Iran’s nuclear programme and stockpile of highly enriched uranium, and the fighting in Lebanon between Israel and the Iranian-backed Hezbollah group. Trump said on Monday on social media that Iran had asked for a meeting with US counterparts, but one of Iran’s senior negotiators said no further talks had been scheduled. For now, the Strait of Hormuz remains open, but shipping is still below prewar levels as operators weigh the risks and both sides hold to different readings of the interim deal.

With PTI Inputs

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