Vessel traffic through the Hormuz Strait quadruples as oil shipments resume

Vessel traffic through the Hormuz Strait has risen more than fourfold in the past week as confidence in the 60-day ceasefire between the United States and Iran grows.

Cause: Security environment and mining status

Two main sea routes through Hormuz have been mined by Iran. The International Maritime Organization estimated about 80 mines would need to be cleared before the waterway could be safely used. In the meantime, ships proceed via the southern route along the Oman coast or use Iran-approved routes requiring IRGC clearance. U.S. and Oman are providing a degree of air protection for ships using the southern corridor.

Development: Traffic patterns and channeling

According to 7-day moving average data from maritime data platform Signal, the count of trackable ships entering and leaving the Persian Gulf per day rose from 1-2 vessels for most of the conflict to eight vessels on July 1. On July 2, Hapag-Lloyd said four ships previously stuck in the Persian Gulf have now left the area. Maersk said two of its ships passed through the strait in the prior week. The uptick suggests shipowners believe they can pass through this disputed waterway safely, though traffic remains well below pre-crisis levels. Carriers are moving ships stranded in the Persian Gulf or capitalizing on elevated freight rates during the calmer window.

Data and statistics

• Before the conflict, about 20% of global oil and gas flows were transported via the Hormuz Strait, with around 135 ships passing daily.
• Vessel traffic into and out of the Persian Gulf, including dark voyages, rose to 258 trips in the week ended June 28, up from 41 trips in the first week of the crisis in March.
• Dark voyages take longer to track as ships turn off GPS signals to avoid detection.
• Among ships entering and leaving the Gulf in the past week, the majority were oil tankers; vessels exiting were primarily those loaded before the crisis and then moored at sea for storage. More than 60 ships were Iranian, reflecting Tehran taking advantage of the U.S. exemption on sanctions for Iran’s oil trade that had been shipped and stored at sea.
• Iran has exported about 40 million barrels of oil since the United States lifted the blockade, at prices about 20% above pre-crisis levels, according to Mohammad Bagher Ghalibaf, head of Iran’s negotiating delegation.
• Oil exports from Gulf states are also rising; Adnoc tankers traversed Hormuz in a convoy along the Oman coast.
• Brent crude has fallen back to pre-conflict levels last week.
• Demand for oil tanker charters surged amid tight vessel supply, lifting the spot charter rate on the Hormuz route to $500,000 per day on June 23, the highest since early April. By July 1, the charter rate had eased to about $294,000 per day.
• Hull insurance costs have fallen to about 2% of the vessel’s value (before discounts), well below the roughly 7% level observed when the ceasefire took effect.

Impact and outlook

The traffic uptick underscores a shift in risk appetite among shipowners, who weigh security risks against the cost of having ships stranded and the potential savings from moving vessels now. While Brent crude has returned to pre-crisis levels, the ongoing risk means transportation costs remain volatile as the situation evolves.

Expert opinion

“It is hard to say whether this reflects increasing confidence or simply that more shipowners are willing to take higher risks. A company when making a decision will weigh not only security risks but also the cost of having ships stranded. At some point, shipowners will accept greater risk to move their ships out of the area.”

“Hull insurance costs are currently around 2% of the vessel’s value, well below the roughly 7% level observed when the ceasefire took effect,” said James Reason, a specialist at insurance broker WTW.