Strait of Hormuz reopens: But can ships’ safety be assured? | Explainer
Marine traffic remains largely stalled in the Strait of Hormuz despite a preliminary ceasefire agreement between the United States and Iran. While President Donald Trump announced the deal on Sunday, ship tracking data from MarineTraffic shows only seven vessels have transited the waterway in the four days since, leaving more than 550 ships stranded. Shipping operators and insurers continue to hold back, citing unresolved security risks and the absence of a verified, mine-free corridor.
Why is shipping traffic not recovering?
Shipping companies are adopting a “wait-and-see” approach because the physical and legal security of the strait remains in flux. According to Haider Anjum, a senior equity analyst at Jyske Bank, market participants need to see a sustained period without incidents before they will deem the route safe. Shipowners are wary of potential mines and the durability of the ceasefire, which is currently in a preliminary stage. Data from MarineTraffic confirms that while the blockade has officially eased, the volume of transit remains a fraction of the 120 to 140 ships that typically passed through the waterway daily before the conflict began.
Before the conflict, the Strait of Hormuz handled approximately 20 million barrels of oil daily. Since the ceasefire, only a handful of tankers have successfully crossed the former blockade line.
What are the primary obstacles to normalization?
The path to a fully operational strait faces three major hurdles: the threat of underwater mines, the introduction of transit fees, and the prohibitive cost of war-risk insurance.
The threat of underwater mines
The risk of mines remains a significant deterrent for commercial operators. US Secretary of State Marco Rubio stated during a June 2 Senate Foreign Relations Committee hearing that Iran mined large segments of the strait. While the US claims to have targeted Iranian mine-laying boats, no formal clearance of the waterway has been verified. Economist Nader Habibi noted that crews will likely remain concerned for weeks, as the presence of even a few unlocated mines makes insurers hesitant to provide coverage.
Disputes over transit tolls
Iran has established the Persian Gulf Strait Authority to oversee transit, a move the US and the Gulf Cooperation Council (GCC) oppose. While international law generally prohibits tolls in natural straits, Tehran maintains it has the right to charge fees for “services” rendered, such as navigation assistance. Habibi suggests that while the US may resist these charges to protect freedom of navigation, it might avoid further conflict to ensure the flow of energy continues.
War-risk insurance premiums
Insurance costs for vessels entering the strait have surged, creating a financial barrier to trade. Oscar Seikaly, CEO of NSI Insurance Group, reports that war-risk premiums currently range between 2.5 and 5 percent of a vessel’s value. Although this is a decrease from the peak of 5 percent during the height of the conflict, it remains significantly higher than pre-war rates of roughly 0.25 percent. According to Anjum, these premiums are expected to stay elevated for several weeks until stability is proven.
Monitor AIS (Automatic Identification System) trackers for real-time data on vessel movement. A consistent uptick in transponder signals from large tankers is a more reliable indicator of stability than political announcements.
Frequently Asked Questions
- How long until shipping returns to normal? Analysts like Haider Anjum estimate it could take up to four months for traffic to normalize, provided there are no new security incidents.
- Are ships currently allowed to pass? Yes, the US and Iran have reached a preliminary agreement, but transit remains subject to coordination with the IRGC and potential inspections.
- Why are insurance rates still high? Underwriters are repricing risk daily due to the uncertainty surrounding the durability of the peace deal and the potential for residual mine threats.
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