Iran moves to put the brakes on reopening the Strait of Hormuz

By Claudia Assis

Hormuz traffic is halted after attacks by Israel on Lebanon, Iranian news agency says

Iran has reportedly halted the passage of ships through the Strait of Hormuz in response to hostilities that followed the cease-fire agreement.

A tenuous cease-fire between the U.S. and Iran brought crude futures sharply lower on Wednesday and shifted focus to the likely slow work of reopening the Strait of Hormuz, whose closure has stranded hundreds of ships, including massive oil tankers.

Renewed attacks, however, seem to be putting the brakes on that reopening.

Iranian news agency Fars News said on X that the passage of oil tankers through the Strait of Hormuz had been halted "following Israel's attacks on Lebanon." Israeli Prime Minister Benjamin Netanyahu's office said late Tuesday that the cease-fire agreement didn't include Lebanon.

Earlier Wednesday, Saudi Arabia's East-West pipeline, which had emerged as a escape valve for Saudi imports as the conflict dragged on, was reportedly hit by a drone.

Pakistani Prime Minister Shehbaz Sharif, a key mediator in the conflict, said on X that "violations" of the cease-fire had been reported and urged "restraint and respect" so that diplomacy can continue. Earlier on Wednesday, Sharif said peace talks had been scheduled in Islamabad for later in the week.

According to the Marine Traffic website and parent company Kpler, some 426 oil tankers, 34 cooking-gas carriers and 19 ships carrying liquified natural gas are waiting to transit the strait. Two dry-bulk ships passed through in the early hours after the cease-fire, Marine Traffic said.

"The strait hasn't reopened. Iran is still the gatekeeper," said Matt Smith, an analyst with Kpler. Smith expects that 10 to 15 oil tankers a day will transit the strait during the cease-fire, "for however long that lasts."

See also: Oil prices plunge below $94 a barrel, on pace for biggest drop since 2020, after U.S. and Iran agree to two-week cease-fire

The Trump administration has challenged reports that Hormuz traffic remains at a standstill.

White House press secretary Karoline Leavitt said the U.S. has seen an "uptick" in traffic on Wednesday and that President Donald Trump expects the strait to be opened immediately and safely. "It has been relayed to him privately that that is what's taking place, and these reports publicly are false," Leavitt said.

The strait - which in normal circumstances sees about a fifth of the world's production of crude and crude products pass through, with very few on-land alternatives - emerged as the key pawn in Iran's strategy to outlast U.S. and Israeli attacks. Iran also retaliated with attacks that hit energy infrastructure in several neighboring countries.

After the first few days of the conflict, when the strait was at standstill, some traffic was allowed through - mostly ships carrying Iranian oil exports, cargo ships that were precleared, and some permitted oil-tanker transit after a few countries secured safe passage directly with Iran.

According to J.P. Morgan analysts, observable Hormuz crossings in March fell to about 5% of prewar levels, while only 18 tankers transited the strait - roughly 12% of normal volumes. India and Pakistan were among the countries able to negotiate secure passage.

The J.P. Morgan analysts said that a full return to "normal" supply conditions in the global crude market would take months to materialize.

The Financial Times reported earlier Wednesday that Iran will demand tolls in cryptocurrency for oil tankers passing through, in a bid to retain control over the sea passage.

The seven Persian Gulf oil producers - Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates - supplied about 30 million to 35 million barrels a day of crude oil and crude-oil products to the world, including about 25 million barrels a day of crude.

Even if a firmer truce were to take hold, shipping companies and port operators would need to see safer conditions in order to transit the strait and re-enter the region. The ships that are now stuck would also need about a day or two to berth, load and depart the congested terminals, depending on their cargo.

"A 'workable system' of transit and shipowner confidence in the security of the transiting vessels is essential," Alan Gelder, a senior vice president at consultant Wood Mackenzie, said in a note.

That includes availability of insurance for the transiting ships, as well as "confidence" that transiting the strait would be viable for the two weeks of the cease-fire and beyond, he said.

-Claudia Assis

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04-08-26 1357ET