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Executive summary
Maritime traffic through the Strait of Hormuz has sharply declined in the past week (July 13-19) due to escalating security tensions, erasing previous gains from the US-Iran Memorandum of Understanding period. Transits of non-Iranian linked ships dropped to 25 from 108 week-on-week and inbound traffic fell from post-war highs to just 8 vessels; total traffic is down by around 90% year-on-year.
Expectation is reduced transits of non-Iranian ships to continue amid ongoing tensions, while a small number of non-sanctioned shadow fleet vessels will be chartered to help move compliant barrels out of the Gulf.
Key takeaways
Transits of ships with no Iranian nexus (either through trade, ownership or sanctions) have plummeted. Preliminary figures indicate 25 transits from July 13-19, down from 108 the week prior.
Preliminary numbers from the most recent week show just 8 vessels entering the Middle East Gulf, this is down from 43 the week prior and 76 in early July, which was a post-war high. Resurgence in inbound trade had been driven by tankers, bulkers and gas carriers.
Overall, total traffic is down about 90% year-on-year
Tanker transits collapsed to 39 during July 13-19, down from 85 the previous week and 109 two weeks earlier. Non-Iran-linked tanker traffic was hardest hit, falling to just 17 from 53 transits week-on-week. VLCC movements declined particularly sharply, dropping to only nine transits from 35 in July 6-12.
Inbound traffic has plummeted, indicating weakening shipowner confidence, with total inbound tanker transits falling to 16 last week and non-Iran-linked inbound movements dropping to just six. Non-Iran-linked inbound VLCCs fell to only two vessels.
AIS disabling has become widespread, making it increasingly difficult to track vessel movements. Nearly 70% of observed tanker transits were conducted ‘dark’, up from 55% the previous week and 42% two weeks earlier, reflecting growing security concerns.
Iran-linked tanker traffic proved more resilient, recording 21 transits versus 31 the previous week amid renewed US efforts to restrict Iranian maritime trade.
The US-backed southern Omani transit corridor is still in use with at least two tankers tracked using it during the week, but a high volume of dark transits makes it difficult to ascertain the route used in most cases.
Source: Lloyd’s List Intelligence Strait of Hormuz Transit Monitor
Security summary
Military activity in the region continues to intensify. The US has conducted 10 consecutive nights of strikes against Iranian military infrastructure, citing efforts to reduce threats to commercial shipping and maintain freedom of navigation through the strait.
Iran claims it has exited the MoU with the US and has resumed attacks on vessels not using its preferred northern route.
Active Hormuz users facing heightened risks. Multiple Greek-owned Dynacom Tankers ships were reportedly struck within a 24-hour period between July 19-20, while another tanker was attacked near Oman, forcing crew evacuation.
Diplomatic efforts remain ongoing but uncertain. Iran has engaged regional mediators, including Pakistan, but there is currently no clear indication of a near-term ceasefire or negotiated settlement.
Disruption could extend beyond the Middle East Gulf into the Red Sea with Iran-backed Houthis announcing a “maritime embargo” on Saudi Arabian ports, warning that any vessel calling at Saudi terminals could face attack anywhere within the operational range of Houthi forces. A Cosco Shipping vehicle carrier reversed course near Djibouti on Tuesday after receiving a Houthi warning that its transit clearance had been cancelled and the vessel could be targeted.
Risk outlook
Transits of non-Iranian ships through Hormuz are expected to remain at a trickle amid this period of heightened tensions but are not expected to completely stall. Risk appetite varies widely throughout the industry, and ships have still been sent through during the worst points of this war to date
There is evidence of non-sanctioned Shadow Fleet* tonnage (crude & product tankers, LPG carriers) “flipping” into compliant trades. The shadow fleet has had its employment options restricted as Venezuelan oil has been largely taken off the table, and the US blockade has reduced access to the Iranian market. Gulf states, broadly unable to utilise the mainstream market for oil exports, are more willing to charter ships with a history of moving sanctioned oil. Shadow fleet ships are generally comfortable operating in high-risk environments and can stand to benefit financially from there are financial incentives to running the Hormuz gauntlet to lift compliant barrels.
Saudi Arabia has relied heavily on the Yanbu export terminal in the Red Sea to bypass the Strait of Hormuz during the current crisis. Since the Hormuz conflict began, Yanbu exports have increased substantially, averaging 3.75 million barrels per day, helping offset lost Gulf export capacity. Crude oil tankers flocked to the Red Sea, via the Bab el Mandeb, in March and traffic levels have been largely on par with pre-Houthi campaign levels. Any targeting of tankers in the Bab el Mandeb Strait or Red Sea by the Houthis could undermine this alternative export route and force tankers to deviate. See our Red Sea Transit Monitor dashboard here.
Industry is adapting to the ‘new normal’ and are highly reactive to the situation on the ground - any relief in military activity will be seen as an opportunity for movement both into and out of the Middle East Gulf.
Join us on Thursday, July 23 for our next Strait of Hormuz Crisis webinar briefing. Register here.
* Lloyd’s List Intelligence defines a tanker as being part of the Shadow Fleet if it engages in one or more deceptive shipping practices indicating that it is involved in the facilitation of sanctioned oil cargoes from Iran, Russia or Venezuela. Or it is sanctioned for participation in sanctioned oil trades or is sanctioned for links to a company that is sanctioned for facilitating the export of sanctioned oil. Or it participates in a cargo delivery where at some point over the course of the delivery one party in the chain engages in one or more deceptive shipping practices.
Lloyd’s List defines an LPG carrier as being part of the LPG Shadow Fleet if it engages in one or more deceptive shipping practices, or if it is sanctioned by the US, UK or EU.
Seasearcher subscribers can activate the Shadow Fleet list by clicking the link above.
