Commodities
Strait of Hormuz Traffic Picks Up After US-Iran MOU, Kpler Says
The transit of commodity vessels through the Strait of Hormuz has seen a notable increase since the signing of a memorandum of understanding between the US and Iran to end the war, according to trade intelligence provider Kpler.An average of 26 commodity vessels have been passing through the crucial waterway everyday since the signing of the interim agreement on June 17, as compared to 10 vessels averaging daily during the conflict. However, the figure is still a long way from the pre-war average of 88 vessels a day, Kpler said.The number of vessels transiting the strait is expected to gradually increase in the coming weeks, barring any setbacks to the ongoing peace negotiations between the US and Iran, Matthew Wright, senior manager of freight at Kpler, told."Rather than a conventional 'queue,' what we observe is vessels holding off and repositioning on the approaches - carriers waiting in the Gulf of Oman and around the entrance to Hormuz, and a backlog of ballast carriers that need to re-enter the Gulf before loading can normalize," Wright said."We'd be cautious about putting a single precise 'number waiting' on the record, because many vessels are switching off their AIS transponders during transit, which makes a live count unreliable."According to Wright, freight rates for very large crude carriers have risen in recent days, incentivizing shipowners to enter the Middle East Gulf. While rates are expected to ease as more vessels return to the region, the normalization process is likely to take several weeks.Insurance costs are expected to remain elevated during the initial stages of the strait's reopening, while insurance requirements and operational procedures remain among the key uncertainties faced by shipowners, he said."On tanker availability specifically, the constraint right now is positioning rather than absolute fleet supply: because so many ballast carriers were kept out of the Gulf, loading activity can't fully normalise until they return, which is exactly the movement we've started to track this past week," Wright said.