Due to the war in Iran, oil flows will not return to normal for a long time. This means one thing
According to CNBC experts, Western merchant ships will likely be hesitant to pass through the Strait of Hormuz if the island remains under de facto Iranian control, especially if they have to cooperate with the Islamic Revolutionary Guard Corps, which will expose them to the risk of violating US sanctions, writes CNBC.
This is a scenario with consequences that are difficult to predict, given the key role that Hormuz plays in global energy markets. Freedom of navigation through the strait was never seriously threatened until Iran closed the sea route in response to the war started by the US and Israel on February 28.
Iran's blockade of the Strait of Hormuz has led to the largest oil supply disruption in history, putting pressure on the United States to reach a deal as the threat to the global economy grows by the day.
Tehran apparently intends to use this advantage to consolidate control over the strait and reach an agreement to end the war.
Middle Eastern leaders believe Iran has already taken control of the island of Hormuz, said Amos Hochstein, senior energy and national security adviser to former President Joe Biden.
“No matter what happens, the Iranians will control the Strait of Hormuz for the foreseeable future,” Hochstein said on CNBC.
“It doesn't even matter what the contract says. Everyone in the region believes it,” he added.
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The blockade also works the other way round: the US wants to cut off Iran from imports and exports via this sea route. On Saturday evening, Polish time, the US Central Command announced that the US air force had disabled the bulk carrier Lian Star in the Gulf of Oman. The ship was attacked on Saturday night after it rejected calls to change course and tried to break through the US naval blockade to an Iranian port.
So far, U.S. forces have disabled six merchant ships and diverted or turned away 116 other vessels trying to enter or leave Iran.
This will affect oil prices
Helima Croft, head of global commodity strategy at RBC Capital Markets, said tanker traffic through the Strait of Hormuz before the war could be the highlight of transit for the foreseeable future.
“In our view, an end to the conflict that allows Iran to exercise operational control and influence over the Strait will result in a noticeable reduction in flows through this waterway,” Croft wrote to clients in a note Thursday.
See also: They fell into Iran's trap. 29 large tankers escaped
As Richard Meade, editor-in-chief of Lloyd's List, said, traffic in this scenario could return to 60-70%. pre-war size, with Chinese ships able to move freely, while Western ships would require bilateral agreements with Iran.
“This does not trigger a recession in the way that some of the doomsday scenarios we have discussed earlier suggest, but it does not allow for a pre-war recovery” – said Meade. “Lloyd's List” is one of the oldest trade magazines in the world devoted to the shipping industry.
In other words, the price of oil (which, as a result of the war in the Middle East, temporarily shot up to over $120 per barrel from $65 before the attack, and is currently hovering around $90) may remain elevated for a long time even when a formal and actual agreement between the US and Iran is in force.
Houthi militants in Yemen, allied with Iran, began attacking merchant ships in November 2023 in response to Israel's war in the Gaza Strip. The attacks began on November 19 with the hijacking of a cargo ship and continued for two years, including missile and drone attacks.
Daily traffic through the Bab el-Mandab Strait, which connects the Red Sea to the Gulf of Aden, has more than halved, from 75 ships on November 19, 2023, to 31 ships on January 30, 2024. After more than two years, traffic through the strait has still not returned to levels once considered normal.
