Iran has begun allowing some vessels to pass through the Strait of Hormuz, according to reports. This development has raised hopes that the recent surge in global energy prices may be somewhat contained.
On the 16th, the Wall Street Journal, referencing marine tracking service MarineTraffic, reported that the Pakistan-flagged medium-sized tanker ‘Karachi’ publicly transmitted its location as it passed through the strait. MarineTraffic indicated that the ‘Karachi’ was the first non-Iranian cargo ship to transit the strait while transmitting an Automatic Identification System (AIS) signal, suggesting that some vessels might be obtaining safe passage through negotiations.
The tanker was carrying crude from Abu Dhabi and had departed from the island of Das, a key oil and gas processing and export hub in the Persian Gulf, located about 100 miles northwest of the UAE mainland. Experts perceive this as Iran permitting the passage of non-Iranian flagged ships through diplomatic negotiations. Jemima Shelley, a senior researcher at the Coalition Against Nuclear Iran, suggested that the vessel might have received approval from the Iranian regime as it sailed through Iranian, not international, waters and noted the importance of monitoring whether this pattern will continue.
Previously, most ships passing through the strait have been tankers in the so-called shadow fleet, typically used to evade sanctions. However, recent observations indicate that Iran has started allowing other nationalities of tankers to pass. Nonetheless, the criteria for which ships are allowed to transit the strait remain unclear.
Additionally, two Indian LPG tankers passed through following a phone call between Indian Prime Minister Narendra Modi and Iranian President Masoud Pezeshkian. Oil tracking firm Kpler recorded that between the second day of the conflict and the 15th, a total of 17 oil tankers traversed the strait, seven of which were Iranian-flagged, likely carrying Iranian oil.
The increased oil exports from the Persian Gulf to India and China could reduce competition with oil from the US and other producing countries, subsequently easing market prices. Indeed, as of the report’s date, Brent crude prices fell by 2.84% to close at USD 100.21 per barrel.
The number of vessels passing through the strait is still significantly below pre-war levels. Steven Gordon, a research director at ship brokerage firm Clarkson’s, noted that last week, only an average of five ships per day transited the strait, compared to 125 per day pre-war. Over the weekend, only three tankers passed through, contrasting with the typical 40 ships over the same period.
Jack Kennedy, Middle East Risk Director at S&P Global Market Intelligence, remarked on the high risk perception among ship operators. Despite potential escorts by the US and its allies, the protection of every commercial ship wishing to transit is uncertain. Kennedy also highlighted that even a single sea mine or drone attack could deter operators from resuming voyages.
Even after the strait becomes safer, alleviating the ship backlog is expected to take weeks. Approximately 1,100 ships are currently reported to be stuck in the Persian Gulf. Although the narrowest point of the strait measures 21 miles in width, only two sections have depths sufficient for large tankers, effectively creating a ‘two-lane road’ where large vessels enter and exit through separate channels.