Strait of Hormuz Rerouting Raises Shipping, Oil Price Costs

Six weeks after the war began, ship traffic through the Strait of Hormuz has remained at an effective standstill.

“As the United States-Israel war on Iran — paused for two weeks on Wednesday amid fresh diplomatic talks — has roiled the global economy for more than a month, Iran and China have seized the opportunity to address a shared gripe about the global financial system”

Al Jazeera

Only seven ships transited the strait in 24 hours compared to pre-war traffic of more than 130 vessels a day.

Al Jazeera

Iran told mediators it would limit transits to about a dozen a day.

An estimated 2,000 vessels have been trapped in the Gulf since the conflict began.

Iran's tolling scheme charges approximately $1 per barrel in cryptocurrency.

Ships need to email Iranian authorities and then pay in bitcoin.

Australian Broadcasting Corporation

Oil industry executives are protesting the tolls.

Conceding to Iran's request could set a broader precedent.

Approximately 11 million barrels per day of crude production has been taken offline.

“Oil prices plunge and shares jump on US-Iran ceasefire plan Global oil prices have fallen sharply and stock markets jumped after the US and Iran agreed to a conditional two-week ceasefire deal that includes the reopening of the key Strait of Hormuz waterway”

BBC

Export volumes from the Middle East Gulf have fallen from 15 million to 7 million barrels per day.

Reopening the strait is only the first step.

Gasoline futures remain well above pre-war lows.

Global oil prices plunged after the ceasefire.

WTI crude fell more than 16% to close at $94.41 a barrel.

CNBC

The US was pressing Gulf Arab partners to ramp up production.

The conflict's disruption to fertilizer supply chains could exacerbate food security.