What to know about the Strait of Hormuz under the ceasefire

Hundreds of tankers are waiting to return to the Strait of Hormuz so that the waterway can once again become a conduit for one-fifth of the world’s oil and gas.

But the shaky ceasefire struck between the United States and Iran has not coaxed the tankers back — and even if it holds, other obstacles have to be overcome for shipping traffic to return to normal.

Source: Esri (Mark Nowlin / The Seattle Times)

Iran has kept a stranglehold on the strait throughout the war by laying mines and attacking vessels. As part of the ceasefire, Iran’s foreign minister said, the country will allow “safe passage” for ships through the strait, but he added that the vessels would have to coordinate with Iran’s armed forces and that passages would be subject to “technical limitations.”

Related

More

What is the situation in the strait now?

Five vessels traveled through the strait Wednesday, according to Kpler, down from an average of about 10 a day over the previous five days. And shipping analysts said there were no signs of large-scale positioning or queuing to go through the strait. As of Thursday morning, three vessels had gone through, according to Kpler.

The fragility of the ceasefire — Iran said Wednesday that Israel’s attacks on targets in Lebanon had violated the agreement — was the main reason ships were holding back, shipping industry participants said.

“It’s too unstable for anyone to commit,” said Oscar Seikaly, CEO of NSI Insurance Group, a maritime insurance brokerage.

What has to happen first for ships to go back?

First, shipping analysts say, there has to be confidence that the ceasefire will hold. And then there has to be a declaration from Iran that it will not attack vessels.

“Iran must clarify that the strait is open for safe passage. Otherwise, vessels should not be expected to sail through the way they were doing prior to the war,” said Noam Raydan, a senior fellow at the Washington Institute for Near East Policy.

But Iran is also demanding that it oversee and coordinate passages through the strait. The government hasn’t clearly stated what vessel operators must do to gain permission to pass through. Some shipowners have made “toll” payments to Iran. During the war, crossings of the strait approved by Iran have been ones close to the country’s coast — and not on the main shipping lanes used in normal times.

This has raised fears that Iran has put mines in the main channels. The country’s Revolutionary Guard, an ideologically hard-line military force, said on Telegram on Thursday that vessels going through the strait had to take a route around Larak Island, close to Iran. The Guard also said there was a possible presence of anti-ship mines in the part of the strait most used by ships in normal times.

Iran’s deputy foreign minister, Saeed Khatibzadeh, said in an interview with ITV News on Thursday that there were mines in the waterway.

Do governments have to get involved?

The governments of India, Pakistan and Thailand have worked with Iran to ensure safe passage of vessels.

In a joint statement Wednesday, the leaders of seven European nations, Canada, the European Commission and the European Council said their governments “will contribute to ensuring freedom of navigation” in the strait.

President Donald Trump suggested Wednesday that the United States might jointly control the strait with Iran.

“The United States of America will be helping with the traffic buildup in the Strait of Hormuz,” Trump said in a social media post. “There will be lots of positive action! Big money will be made.”

ABC News reported Wednesday that Trump had told one of its reporters that the United States could operate shipping in the strait “as a joint venture” with Iran.

Will shipping return if Iran doesn’t give up full control?

Analysts say Iran can continue to act as a gatekeeper if the number of vessels going through the strait remains relatively small. But it would not be able to manage the more than 100 ships a day that passed through the strait before the war.

“Blanket passage arrangements are unlikely to be implementable by Iran, due to capacity constraints around vessel identification and ongoing requirements to guide vessels through the corridor,” Jack Kennedy, head of Middle East and North Africa country risk at S&P Global Market Intelligence, said in an email.

Also, the threat of war will linger if Iran keeps throttling the strait. The Persian Gulf states do not want Iran to have such power over the waterway. Oman, the country on the other side of the strait, could invite ships to pass close to its coastline, but such a move might prompt Iran to attack the vessels.

Will shipping companies pay a toll to Iran?

Given that more than 100 large commercial ships have gone through the strait since the war began, some vessel operators are willing to negotiate with Iran and even pay millions of dollars for a passage. Shipping companies are losing money on vessels that are waiting to go through the strait, so they may be willing to pay large sums to get their ships out into the Indian Ocean and operating normally.

Still, the larger, more established shipping companies may decide that doing business with Iran is too much of a legal risk, particularly if the United States continues to impose sanctions on Iran.

“The issue of sanctions on Iran makes it a very complicated process, since it involves financial transactions with a sanctioned regime,” Raydan said.

In the attempts to forge a lasting peace, there will be pressure on Iran to give up any plan to demand payments for passages.

Sponsored

Britain’s defense secretary, John Healey, said Thursday that Britain and its allies wanted to see the strait “open, free, consistent with the long established laws of international navigation, without any sort of tolls for passage.”

How hard is it to get insurance?

When the fighting began, the cost of “war risk” insurance for ships and cargo going through the strait skyrocketed. A few shipping companies bought it, and it has been available at times during the war, Seikaly said. But the fragility of the ceasefire has driven down demand for insurance.

“It is not the right moment, and everyone knows that,” he said.