Oil tanker traffic disrupted in Strait of Hormuz main shipping lanes: CAS

Oil tanker traffic transiting the main shipping lanes in the Strait of Hormuz was halted on March 1, according to tracking data reviewed by Platts, part of S&P Global Energy.

There were no crude or product tankers seen arriving to transit the main Hormuz traffic separation scheme (TSS) channels that run east–west through the narrowest part of the strait between southern Iran and the UAE/Oman coast, according to tanker tracking data from S&P Global Commodities at Sea.

Not all traffic was gone, however. "Commercial traffic, though reduced in volume, continues to transit the strait," the Joint Maritime Information Center said in a Feb. 28 advisory at 19:35 UTC (11:35 pm Dubai time).

Around one-fifth of the world's crude oil is shipped through the Strait of Hormuz, which lies just off the coast of Iran, making it vulnerable to oil price shocks amid regional conflicts.

The TSS' two main shipping lanes - which normally transit inbound tankers to the Gulf and one outbound to the Gulf of Oman/Arabian Sea - are each about 2 miles wide, separated by a central buffer zone.

"The US is advising against sailing through the Arabian Gulf, Gulf of Oman, North Arabian Sea and the Strait of Hormuz, and the Iranian Revolutionary Guard is transmitting occasionally through maritime radio channels that the Strait of Hormuz is now closed," Chief Safety & Security Officer at BIMCO, Jakob Larsen, said by email on March 1. "There are, however, no official Iranian intelligence reports for now indicating that a decision to attempt to close the Strait of Hormuz has been made at this stage."

Insurance rates for shippers are expected to increase "manyfold, and ships with business connections to the US or Israel approaching the area are probably not going to be able to get insurance," Larsen said from a Feb. 28 email.

Iranian media claimed on Feb. 28 that they had shut the crucial waterway, while UKMTO said the messages circulating among mariners did not constitute an official warning of closure.

There are about 240 ships near the Strait of Hormuz, most of them centered around Iran's Bandar Abbas, according to S&P Global Mint ship tracking. Only about 130 of them are loaded, or laden, according to the data. None of the ships is carrying crude, according to Mint.

One Dubai-based shipbroker said that ships would likely begin to clear out of the strait in the coming day, noting that boats move slowly and it takes time to exit the waterway, seeking new ports to discharge cargoes instead.

Shipping backlog

Activity in the strait fell by 40% to 50% by 7:30 pm UTC Feb. 28, according to S&P Global Commodities at Sea analysts, with the note that vessels appeared to flee the strait at the time.

"Laden ships will idle away from drama," the Dubai-located shipbroker told Platts, adding that vessels would perhaps reroute to Fujairah and allow vessel owners and traders to make alternative arrangements.

Crude tankers were observed clustered near the Port of Fujairah in the UAE, just outside the Strait of Hormuz, with vessels headed toward the port, according to data from Commodities At Sea March 1.

"The [tankers] inside, I'm not sure what they will do," the broker said, suggesting that ships may opt to wait a few days and "see what happens," but crew may refuse to transit the volatile Strait.

"For the time being, we expect any decisions made on vessel routings to be made on a vessel-by-vessel basis," Maersk stated on its website on March 1.

Platts assessed Dated Brent at $70.94/bbl on Feb. 27, down 1.53% on the day.