Shipowners reluctant to risk the Strait of Hormuz

• IOC draws no tanker transit bids
• More vessels leaving than entering
• Questions over safety and insurance

Shipowners are wary of sending tankers back through the Strait of Hormuz despite last week’s ceasefire and the phased reopening of one of the world’s most important energy chokepoints, analysts have said.

The hesitation points to the difficulty of restoring confidence in shipping through the strait even as vessels begin moving under a plan, backed by the United Nations, to clear hundreds of ships and thousands of sailors stranded during the conflict.

Energy company Indian Oil Corporation (IOC) failed to attract bids for tankers to collect crude and gas from Gulf ports, Reuters reported. Analysts said this amounted to an early market test of shipowners’ willingness to return to the waterway.

While ships have begun transiting the strait under the UN-backed evacuation plan to clear hundreds of vessels and 11,000 seafarers stranded in the Gulf, Iran’s Islamic Revolutionary Guards Corp (IRGC) has insisted vessels use only routes designated by the republic, creating more uncertainty for shipbrokers.

Before the conflict broke out on February 28, about a fifth of the world’s oil supplies – or 20 million barrels – moved through the strait each day.

A US-Iran memorandum of understanding signed last week has paved the way for the phased reopening of the waterway.

IOC released tenders last week to charter one very large crude carrier, designed to carry 2 million barrels of oil and a Suezmax tanker, which can carry 1 million barrels.

It also sought bids for one very large gas carrier, which can transport up to 45,000 tonnes of highly flammable butane and propane that is typically used for domestic cooking.

IOC was reportedly seeking to import oil from Kuwait and Saudi Arabia, and LPG from either Saudi Arabia, Qatar or Kuwait.

Tanker traffic has increased in recent days. The most recent Lloyd’s List data shows that 87 traceable non-Iranian vessels left the strait between June 15 and 21, while just 31 entered.

The trend was reversed for Iranian vessels, with 27 entering the strait and 30 leaving during the same period, Lloyd’s List figures show.

These remain far below pre-war levels, when more than 700 ships would typically traverse the strait a week. Analysts said the snubbing of the IOC request showed the difficulty of convincing shipowners to send tankers back through the waterway.

“The IOC tender is a more revealing signal than much of the headline traffic data coming out this week,” said Arsenio Longo, founder and chief executive of Huax Energy Intelligence.

“It is effectively a market test, and the market did not answer.”

He said vessels already inside the Gulf had “every incentive” to leave after weeks of waiting with committed cargoes, while sending fresh ships into the region exposed owners to higher war-risk insurance costs, delays, uncertain port operations and an unsettled security environment.

“The one-way pattern is not a formal restriction. It is a confidence and risk-appetite bottleneck,” he said.

Longo added that the issue had moved beyond whether vessels could physically travel through the strait and had instead become a question of whether voyages could be priced, insured and justified by shipowners, charterers, crews and underwriters.

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One of the biggest operators of supertankers, Sinokor, has provisionally booked a vessel to transport oil from the Gulf at nearly nine times benchmark rates, Bloomberg reported.

Commercial vessels would normally use the Strait of Hormuz’s established Traffic Separation Scheme, a set of internationally recognised shipping lanes.

But concerns that parts of the route may contain sea mines have prompted vessels to use alternative routes, while the IRGC has instructed ships to use only lanes designated by Tehran, adding further uncertainty for shipowners.

Hamad Hussain, climate and commodities economist at Capital Economics, said the fact that there have been multiple shipping routes appears to be “generating additional risks for shipowners deciding which route is best to take”.

“Confusion over whether Iran had closed the strait again over the weekend would not have helped in this regard too,” Hussain said.

“Evidence of other ships willing to take the risk and successfully passing through the strait could trigger a domino effect that leads to more ships willing to enter the Strait of Hormuz.”