The Strait of Hormuz, one of the world’s most vital waterways for global oil trade, is now set to be accessible to ships again. This decision could have far-reaching effects on the oil market and fuel prices, but numerous challenges stand in the way of a full normalization.
Iran is expected to clear mines in the strait within 30 days of signing a memorandum of understanding with the United States. The declaration initially lasts 60 days, during which a final agreement is sought. A key issue could be a potential toll on international shipping that Tehran might impose.
Before the Iran war began, about 20 percent of global energy trade passed through the Strait of Hormuz. According to Richard Meade, editor-in-chief of Lloyd’s List Intelligence, major shipping companies have already started sending vessels through the strait. Among the first were tankers from Grimaldi Group, Cosco, Knutsen, and NYK, which successfully completed the passage.
However, due to the mines, tankers currently have to use alternative routes, said Phillip Belcher, head of shipping at tanker industry association Intertanko. This shows that the security situation in the Strait of Hormuz is still considered unstable. The international shipping association Bimco still rates the passage as risky.
“We will only sail through the Strait of Hormuz when we are 100 percent convinced it is safe,” said Alexander Saverys, CEO of oil transport specialist Tech, in an interview with the Financial Times. Currently, around 500 commercial vessels are waiting in the Persian Gulf to proceed, including 46 ships from German shipping companies with about 1,000 seafarers.
The challenges hindering a return to pre-war conditions are manifold. Besides mines, insurance issues and damage to production facilities must also be considered. These factors could significantly affect the stability of the oil market and fuel prices, which in turn could impact the global economy.
The situation in the Strait of Hormuz remains tense, and it remains to be seen how quickly a full normalization can be achieved. The coming weeks will be crucial to see whether the parties involved can overcome the existing obstacles and find a lasting solution.
Source: Tagesschau
