Reaching 59 transits, June 24 has marked the highest number of Hormuz crossings since US-Iran MoU was signed, with traffic slowing down following last week’s attack on a cargo ship and weekend strikes on Iranian territory.  

Iran’s Foreign Ministry has announced that it would allow ships to transit the Strait of Hormuz only if they use the northern route closest to its coast during the current 60-day ceasefire period, asking Oman to redirect all vessels towards Iran’s coast.

Last week’s daily transit rates hover around 20-25 ships per day, however nowadays most of Hormuz movement is inbound rather than outbound, suggesting shippers await safer days to pass through the strait. Longer delays in the pace of re-opening could derail plans of Middle Eastern producers as both Kuwait and Iraq have been massively ramping up their oil production over the past week, to 70-75% of pre-war levels.

Global crude on water – the aggregate number of oil that is currently loaded onto tankers – has jumped to its highest since the start of US-Iran hostilities this week, reaching 1.29 billion barrels. The recovery in refined product supply would take longer than the resumption of crude oil flows as refined product cracks in the US, Europe and Asia have all gone up last week amidst shrinking inventories.    

With the Hormuz still half-open, the oil markets are increasingly pricing in a period of summer volatility. The resumption of missile attacks between the US and Iran has not helped shippers to deflate war risk premiums and insurance costs, yet flows out of the Gulf continue to trend higher than they were before the signing of the MoU. ICE Brent has gained more than $1 per barrel so far this week, trending above $73 per barrel, a new flashy headline could send oil prices in any direction now. 

/OilPrice/