US blockade unlikely to change Hormuz shipping hiatus: IMO chief

The US blockade of Iranian ports will do little to change the effective halt in shipping transits via the Strait of Hormuz, where Iran's control of the key energy shipping route has choked off normal trade flows since late February, the head of the International Maritime Organization said April 13.

Following the collapse of US-Iran weekend peace talks in Islamabad, US Central Command started to enforce a blockade of all maritime traffic entering and exiting Iranian ports from 1400 GMT on April 13.

"I don't see a big change right now in the status quo ... A further blockage right now doesn't really change the fact that there's no normal trade," Secretary-General Arsenio Dominguez said, joining the industry chorus of opposing the imposition of a toll system.

"Additional blockade just doesn't really help anything in finding a solution to the conflict," he told reporters in the UN agency's headquarters in London.

Iran has seized control of the Strait of Hormuz -- a key chokepoint handling 20% of global oil and LNG flows in normal times since its war with Israel and the US started Feb. 28, only allowing access to its own tankers and a limited number of ships, nearly all of them associated with Asian countries.

S&P Global Commodities at Sea data showed 18 ships passed through the strait on both April 11 and April 12, the highest number since March 1 but still significantly down from 135 before the start of the war.

Toll system

With some 20,000 seafarers stranded aboard ships in the Persian Gulf, the IMO has been working with Iran, Oman, the US and other relevant countries in establishing a safe Hormuz passage mechanism by utilizing the Traffic Separation Scheme, according to Dominguez.

The TSS was the trading lane used by ships before the conflict, but Iranian authorities have routed ships toward waters near Larak Island during their Hormuz passage while parliamentarians have spoken of charging a toll of $2 million per transit. Some ships have occasionally traveled close to the Omani coast during their transits.

"All the countries need to respect the right of passage and the right of free navigation, and there's no legal mechanisms to introduce any type of toll," said Dominguez.

"So I will ask everyone to actually play by the rules and not to be participants in these kinds of measures."

On April 12, US President Donald Trump also vowed to interdict ships that had paid a toll to Iran when announcing the US blockade.

When asked to comment on the development, the International Chamber of Shipping said it is opposed to any measures by any party that infringe upon the right of innocent passage or disrupt international shipping.

"There is no legal basis nor a mechanism for the establishment of tolls in international straits and this could set a dangerous precedent for international shipping," the industry body representing over 80% of global merchant fleet said. "We strongly encourage operators to monitor and comply with all official naval and governmental advisories in the region."

Uncertain outlook

Security officials have had mixed reactions to recent US actions, which involve mine clearance in the strait by CENTCOM but could trigger further retaliation by Iran and Yemen-based Houthi militants, which have threatened to support Iran by exerting control over the Bab el-Mandeb Strait.

"The shipping industry is concerned about breaches of international conventions and the attack on the right to freedom of navigation," industry association BIMCO's Chief Security Officer Jakob Larsen told Platts, part of S&P Global Energy.

"The risk of further escalation to involve direct attacks on ships is also of concern, as well as the wider impact on the international economy."

Corey Ranslem, CEO at security consultancy Dryad Global, said the US military presence could bring most of the remaining Hormuz traffic to a halt before restoring cargo flows.

"I believe this could potentially help to increase the security within the region and help to fully open the strait on a much faster timeline," Ranslem said.