economy
Oil tanker CEO sees Hormuz ship traffic quickly increasing if U.S. and Iran reach a deal
Many shipowners are just waiting for the threat assessment to be downgraded before crossing Hormuz, Frontline CEO Lars Barstad said.
TL;DR
- Commercial ship traffic through the Strait of Hormuz could increase rapidly if the U.S. and Iran reach a stable agreement.
- Frontline CEO Lars Barstad is optimistic about an increase in transits once shipping is no longer under threat.
- Traffic is not expected to return to pre-war levels of 130-140 vessels daily, but could rise from the current five to 10.
- Some companies are positioning tankers to capitalize on a potential reopening of Hormuz.
- The security situation remains volatile, with past threats and pullbacks between the U.S. and Iran.
- About 10% of the world's very large crude carriers are currently stuck in the Gulf loaded with oil.
- Gulf states are eager to export crude due to full storage and the cost of the disruption.
- Repositioning tankers is seen as a major obstacle to increasing oil flows through Hormuz.
- High freight rates are expected to attract tankers back to the Middle East.
- Damage to some oil wells during the conflict may permanently reduce oil output from the Middle East.
- Many shippers are waiting for a downgrade in threat assessment from the highest alert levels.
- The Joint Maritime Information Center has warned of critical and elevated risks in Hormuz.
- Traffic has already increased, with U.S. Navy assisting commercial ships.
- Half of current transits use the Iranian-designated route, the other half use the southern route near Oman.
- Potential transit fees are being discussed by Iran and Oman, but the U.S. opposes them.
- The shipping industry dislikes transit fees but may adapt if they become part of a deal.