Vessel traffic through Hormuz dwindles this week as markets watch Iran-Oman talks

• Only 4 vessels transited the strait on Thursday, including one tanker carrying 2 million barrels of Iraqi crude, while just 6 crude oil tankers have exited the strait all week
• Iraq's SOMO is offering discounts of nearly $30 per barrel for Basrah crude to attract buyers, but shipowners remain wary of entering despite interest from Chinese and Indian refiners
• A proposed Iran-Oman deal to give Tehran control over ships entering through Hormuz faces implementation challenges due to U.S. sanctions and restrictive insurance payment clauses

Summary: Strait of Hormuz Traffic Plummets Amid Iran-Oman Negotiations

Key Developments:

Shipping traffic through the Strait of Hormuz has dropped significantly to just 33 vessels from Monday to Thursday this week, down from 50 vessels in the prior week. This represents a dramatic decline from typical pre-closure levels of 130-140 ships transiting the strait.

Critical Figures:

• Only 4 vessels transited Thursday, including one very large crude carrier (VLCC) carrying 2 million barrels of Basrah crude from Iraq
• Just 6 crude oil tankers have exited the strait this week
• 21 vessels have entered, primarily via the Iranian route
• Iraq's state oil marketer SOMO is offering discounts of nearly $30 per barrel for Basrah Heavy and Basrah Medium crude for August loading

Current Situation:

Iran closed the waterway following events that began February 28. Talks between Iran and Oman are ongoing regarding a proposed deal that would give Tehran control over ships entering the Gulf through the strait. However, sources indicate the arrangement faces significant obstacles due to U.S. sanctions and restrictive insurance payment clauses.

Chinese and Indian refiners have shown interest in loading Iraqi crude, attracted by steep discounts, but shipowners remain hesitant to enter the waterway. No vessels have been secured despite inquiries from multiple refiners.

Alternative Route:

Traffic through the Bab el-Mandeb strait on the Red Sea increased to 26-28 vessels on Thursday, up from 19 the previous day, suggesting some rerouting of shipping activity.

Market Implications:

The continued bottleneck at this critical chokepoint threatens global oil supply chains and highlights ongoing geopolitical tensions affecting energy markets.