Shipping Through the Strait of Hormuz Slowly Recovers After US-Iran Deal

Traffic through the Strait of Hormuz is slowly picking up after the US-Iran deal. Shipowners are first waiting for proof that safety is really improving.

Key Takeaways

• Reopening the Strait of Hormuz after the US-Iran deal is moving slowly, because shipowners want to see practical implementation first.
• MOL CEO Jotaro Tamura expects it will take a few weeks to a month before shipping traffic fully picks up again.
• A few ships have already passed through, but normalization is still uncertain and matters for Europe’s energy supply.

Reopening the Strait of Hormuz for shipping after a deal between the United States and Iran is moving slowly. According to Jotaro Tamura, CEO of Mitsui OSK Lines (MOL), the world’s largest tanker company by number of ships, shipowners will only feel comfortable sailing through this strategic strait again after a few weeks. Tamura stressed that the deal not only has to be formally signed, but also has to clearly work in practice before shipping gets moving again.

Confidence in Practical Implementation of the Deal

The Strait of Hormuz is a crucial passage for global oil and liquefied natural gas transport, with more than a fifth of the world’s energy flows passing through it each day before the war. Since the conflict broke out in February, shipping traffic has dropped sharply. Tamura points to earlier false starts and broken promises over the past few months, which have made shipowners cautious. He expects it could take at least a few weeks to a month before the situation is stable enough for shipping traffic to fully resume.

Current Situation and Outlook

MOL manages more than 900 ships and moved four vessels out of the Gulf region before the deal was reached. At least seven ships are still waiting to pass through the Strait of Hormuz. Meanwhile, a few ships have already made the crossing, including the Indian LNG tanker Disha, the first Indian ship to sail through the strait after the deal with a cargo of more than 62,000 tons of gas. So far, ten ships flying the Indian flag and five foreign ships have passed through successfully.

The deal, which is expected to be officially signed in Geneva on Friday, is meant to end the nearly four-month war and reopen the passage. How quickly shipping fully normalizes will depend heavily on shipowners’ confidence in the security and stability of the corridor.

Relevance for Europe’s Energy Supply

For European markets, the gradual reopening of the Strait of Hormuz could be an important development, since this route handles a large share of global oil and gas supplies. A stable passage could help ease tensions in the energy market and improve fuel availability. Still, it remains unclear how quickly, and to what extent, shipping traffic will recover, which matters for European energy importers and markets that depend on this supply route.