Strait of Hormuz crossings remained uneventful over the past week as traffic remains subdued amid little progress in negotiations to reopen the vital oil conduit.
There were 95 confirmed transits from Aug. 10-16, down from 118 during the prior Aug. 3-9 week, according to data from ship tracking intelligence platform MarineTraffic.
Activity peaked at 19 crossings last Tuesday, before declining through the weekend, reaching just three crossings on Sunday. The Sunday count was the lowest of the week and marked a sharp reduction from midweek levels.
Roughly 130 to 140 vessels crossed the strait daily before the war in Iran began on Feb. 28.
The slowdown came ahead of the expiration of the 60-day ceasefire between the U.S. and Iran on Monday. That deal was established by a 14-point memorandum of understanding to end the hostilities and open freedom of navigation in the Strait of Hormuz. But both parties have violated the terms of the deal throughout the two-month period, dampening hopes that the tenuous truce would lead to a more concrete agreement to end the conflict.
President Donald Trump signaled he was not imposing a new deadline on Tehran after the , telling Fox News Monday morning, “I have no time schedule. I’m not in a hurry.”
President Trump threatened to bomb Oman if the country “gets in the way” of U.S. efforts to reach a peace deal with Iran, according to the Fox News report. Oman, a U.S. ally, has been in negotiations with Iran to ensure the strait is fully open for commercial shipping without any security concerns.
Despite the continued lack of resolution in the shipping corridor, President Trump asserted last Wednesday that the U.S. has total control of the Strait of Hormuz.
On Friday, he ramped up that rhetoric, saying he plans to declare the Strait of Hormuz a U.S. territory.
A report from Reuters on Monday said Iran has decided to shift its policy from defensive to “fully offensive” due to the deadlock in efforts to agree a permanent end to the war.
“Iranian entities must be prepared to escalate tensions in the Strait of Hormuz and wider region, as Iran will be ready to make decisions and take action on difficult decisions,” the Iranian official said.
According to a report from Iran’s Fars News Agency, Iran’s Islamic Revolutionary Guard Corps (IRGC) seized a U.A.E.-owned oil tanker in the strait Monday.
Within the hour after the report of the tanker’s detainment, crude oil futures on Monday jumped 1.5 percent to $83.73 per barrel.
Maersk, Hapag-Lloyd navigate Middle East disruption, volatile oil prices
Maersk CEO Vincent Clerc mentioned in an earnings call Thursday that the ocean carrier has used land bridge solutions to protect customers’ supply chains when shipping to and from certain Middle Eastern countries including Saudi Arabia, Kuwait, Bahrain, the U.A.E., Qatar and Iraq.
Clerc said in the call that volatile oil prices will continue to play a big role in the company’s unit costs for the remainder of the year, “depending on what reserves are at, what consumption is at, whether Hormuz opens or it doesn’t reopen.”
According to the CEO, the company recovered Middle East-related cost increases through regional surcharges and adjustments to bunker formulas. Bunker fuel prices were up 44 percent year-on-year, resulting in a negative impact to Maersk of roughly $612 million in the second quarter.
Partner carrier Hapag-Lloyd tallied the second quarter cash impacts of the Hormuz disruption at roughly $600 million, with average bunker consumption price increasing sequentially from $485 per metric ton in Q1 to $700 per metric ton in Q2.
Handling and haulage costs were affected by higher storage expenses, fuel surcharges and increased inland transportation costs related to alternative routing solutions like land bridges, the company said. The company reopened bookings to and from the upper Persian Gulf area last month through its land bridge alternatives and third-party feeder services in the area.
The ongoing security concerns at the Strait of Hormuz are among multiple global supply chain bottlenecks that have put upward pressure on freight rates in recent months, with ocean carriers imposing surcharges related to draft restrictions at the Panama Canal. Congestion has also remained rampant outside Asian ports throughout July and August amid multiple typhoons, while low-water conditions in the Rhine River have slowed down inland cargo transportation across Europe.