US EditionWhy reopening the Strait of Hormuz won’t be enough to solve shipping woes and high oil prices
Loaded tankers and cargo ships remain trapped in the Gulf, and Matt Smith of Kpler said oil flows could take until July to normalize.
- Even if the Strait of Hormuz reopens immediately, global oil flows will likely not normalize until July, according to Matt Smith of trade analytics firm Kpler. Experts say restoring supply chains requires clearing the massive backlog of trapped vessels.
- Production of crude oil, gasoline, and fertilizer halted during the past six weeks because there was no place to store goods. Currently, about 400 loaded oil tankers remain trapped in the Gulf awaiting departure.
- Tanker traffic through the Strait has dropped to 10 or fewer daily, Smith noted, as almost no shipping operators are confident enough to enter the Gulf amid ceasefire concerns. This dramatic decline reflects widespread hesitation among vessel operators.
- About 100 container ships are waiting to exit with virtually none entering, Peter Tirschwell of Global Market Intelligence reported. This imbalance leaves 30% of global fertilizer supply stuck in the region.
- Lale Akoner, a global market analyst, warned that a two-week ceasefire is insufficient to give shipping operators the confidence needed to re-enter the Gulf. Without empty ships sailing back into the Strait, benefits from clearing loaded vessels will prove short-lived.
17 Articles
17 Articles
Reopening the Strait of Ormuz is proving difficult. But even if this vital sea lane is fully opened and the oil and other necessary cargoes get out, it will not be enough for everything to return to normal.
Why reopening the Strait of Hormuz won’t be enough to solve shipping woes and high oil prices
Reopening the Strait of Hormuz is proving to be difficult. But even if the vital waterway fully opens and oil and other necessary cargo sail out, it won’t be enough to return things to normal.
Summer travel at risk with European oil set to run dry before Strait of Hormuz flow returns
The impact of the Israeli-US war on Iran could cause disruptions to jet fuel supplies well into the summer travel season despite recent talks and ceasefire negotiations, experts have warned. The conflict resulted in Iran shutting down the Strait of Hormuz, a key shipping route for a fifth of global oil. Jet fuel is second only to labour in terms of airline outlay, and accounts for over a quarter of carrier expenses. As a result, suites of commer…
Opening the Strait of Hormuz is proving to be a tricky equation in practice. Even if the vital waterway is fully reopened and oil and other cargo begin to move at an increased rate, it will not be enough to return the situation to normal. That is because empty ships will have to return to the Strait to keep the flow of products and goods. Experts say that shipping companies will not start returning to the Persian Gulf, as there is a strong risk …
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