Shipping through Hormuz at a standstill since US seized Iranian vessel

Commercial traffic through the Strait of Hormuz is nearly at a standstill on Monday 20 April after a brief and chaotic reopening over the weekend ended with the United States seizing an Iranian vessel for the first time.

Source: Bloomberg

Details: After seven weeks of war in the Persian Gulf, the passage of shipping via the waterway has been reduced to a minimum as Iran tightens control in response to US and Israeli strikes.

On Friday 17 April, it appeared the paralysis was ending as Iran and the US announced the reopening of the strait, triggering a drop in oil prices and a rush of vessels to pass through. However, the situation quickly spiralled again.

By Sunday 19 April, the US Navy had seized an Iranian cargo vessel in waters near the Iranian port of Jask in the Gulf of Oman as it was heading towards the Strait of Hormuz.

This move – the first during the current US blockade – raised the stakes for shipowners operating in the region and expanded the area considered risky for transit.

Benchmark oil prices rose in response, as what was already a historic supply crisis began to look as if it would be even more prolonged.

One oil products tanker currently en route is the Nova Crest, which is sailing just south of Larak Island and exiting the Strait of Hormuz into the Gulf of Oman.

The vessel has been sanctioned by the UK, the EU and Switzerland for its involvement in trading Russian oil. Its destination is listed as Khor Fakkan in the United Arab Emirates.

Background:

• On 18 April, Iran announced the resumption of the blockade of the Strait of Hormuz after the US refused to lift its naval blockade of Iranian ports in the Persian Gulf.
• Gunboats from the Islamic Revolutionary Guard Corps opened fire on a tanker near the Strait of Hormuz.
• On 19 April, US President Donald Trump sent representatives to Islamabad, Pakistan, for talks on Iran. He said the Islamic Republic had violated the ceasefire by firing on a French vessel and a British ship.
• However, on 20 April, Trump said American forces had seized an Iranian vessel as it attempted to get past the US blockade in the Gulf of Oman.

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