Oil tankers are now avoiding the Strait of Hormuz, the shipping lane that links the oil-rich Persian Gulf to the open seas, after the United States and Israel bombed Iran. While a large number of vessels halt outside the waterway, some others already transiting have turned back. This is after ships transiting the gulf reported hearing a radio broadcast believed to come from the Iranian navy announced a transit ban through the Strait of Hormuz.
While there has been no official communication from Iran on the status of the waterway, most shipowners are taking a cautious approach. The US earlier issued a warning to shipping in the Middle East that vessels in the region should stay 30 nautical miles away from its military assets.
Tracking data, according to Bloomberg, shows some tankers turning around, and at least one shipowner decided not to send its vessel into the strait as a result of the broadcast. Reliable sources disclose that some vessels, however, continue to pass through, with about seven ships seen exiting Hormuz while six were entering after the warnings had been issued.
According to Bloomberg, the sharply reduced traffic offers the first signs of disruption to commodity markets from the US decision to attack Iran, though it is unclear how long it will last. The Strait of Hormuz is one of the most important focal points during periods of tension with Iran because roughly one-fifth of the world’s seaborne oil and liquefied natural gas passes through it each day.
Tehran has previously threatened to block it but has never fully closed the waterway. Traffic had already slowed significantly in the wake of the attacks, and Bloomberg reported earlier that tankers were piling up both inside and outside the entrance to the strait. Bloomberg also reported that Japanese giant, Nippon Yusen KK, had earlier instructed its fleet not to navigate Hormuz while Greece instructed its vast merchant fleet to reassess passage.
One owner said they interpreted the US advisory as effectively closing the waterway. Several shipowners later received a broadcast instructing ships not to proceed through the strait and stating that it was “banned for all ships.” Oil futures markets are closed all through the weekend, limiting insight into how traders are pricing risk in the wake of the attacks.
However, a retail trading product run by IG Group Ltd. was pricing West Texas Intermediate as high as $75.33 at one point, a gain of as much as 12 percent from Friday’s close. Traders are also watching for broader disruptions, including the impact of Iranian retaliatory strikes and whether any ports are affected.
Oil tankers are coming to a stop on both sides of Hormuz, with three vessels halting journeys out of the Persian Gulf and a small flotilla of at least eight tankers building up over the past two weeks outside the Gulf of Oman. Others are aborting their voyages partway through the waterway.
