Arabian Post Staff -Dubai
The immediate trigger was the interception of the cargo ship Touska, which Washington said was attempting to breach its blockade on Iranian ports. Tehran denounced the move as armed piracy and threatened retaliation, while China urged restraint and called for steps to restore normal transit. The seizure has injected fresh uncertainty into already shaky diplomatic efforts and raised the risk that commercial operators, insurers and shipowners will again hold vessels back rather than test the waterway.
For oil markets and shipping companies, the message was blunt. The Strait had shown a flicker of activity on Saturday, when more than 20 vessels passed through, the highest daily figure since the conflict began on February 28. That movement briefly encouraged hopes that trade might resume in a more orderly way. Those hopes faded quickly as shipowners struggled to assess whether the reopening was real, who controlled safe passage, and whether military instructions from opposing sides could be reconciled in practice.
Before the conflict, the strait handled roughly 130 to 140 vessel crossings a day. Since the fighting and blockade measures began, traffic has run at only a fraction of that level, at times dropping below 10% of normal volumes. Analysts and ship-tracking firms say this is not simply a matter of official declarations that the route is open or closed. Masters, charterers and insurers need confidence that ships will not be caught between Iranian directives, US naval enforcement and the wider military risk hanging over the Gulf.
That caution is being reinforced by cost. War-risk insurance has surged sharply since the crisis expanded, with premiums on some Gulf voyages rising from pre-conflict levels around 0.25% to several percentage points of a vessel’s value. On large tankers worth hundreds of millions of dollars, that can translate into millions of dollars for a single passage. Even where cover is still available, owners and charterers must weigh whether the economics, crew safety and legal exposure justify a transit.
The consequences extend far beyond shipping schedules. The Strait of Hormuz normally carries about a fifth of global oil and refined-product flows, making any prolonged disruption a direct threat to energy consumers, refiners and import-dependent economies, especially in Asia. Reuters reported that 10 million to 11 million barrels a day of crude production remained offline, while refined-fuel markets were already showing sharper strain than headline oil prices alone suggested. Singapore jet fuel prices have more than doubled from pre-war levels, and gasoil prices have also climbed steeply, reflecting physical tightness as well as geopolitical risk.
Crude futures responded swiftly to the renewed tension. Brent rose above $95 a barrel and US crude pushed near $89 after the ship seizure and the collapse of optimism surrounding the ceasefire. Those gains followed a sharp retreat late last week when traders briefly believed the reopening of Hormuz might stick. The whipsaw underscores a growing divide between financial markets, which can react to political statements within minutes, and the physical shipping market, where confidence is rebuilt more slowly and can be destroyed by a single military incident.
Diplomatically, the episode has made an already difficult path narrower. Washington has tied the seizure to sanctions enforcement and its wider pressure campaign against Tehran. Iran, for its part, has argued that the interception violated the spirit of the ceasefire and has cast doubt over planned talks. China’s public expression of concern added another sign that major importers and trade partners are alarmed by the risk of escalation, not only because of oil but because the passage links Gulf producers with global supply chains for chemicals, fuels and containerised trade.
Also published on Medium.
Follow Arabian Post
Select Arabian Post as your preferred source on Google and MSN News for trusted business news and Arab politics and updates.
