Two key things that need to happen before Strait of Hormuz traffic can return to prewar levels

By Myra P. Saefong

The U.S. and Iran agreed to a framework for a peace deal that extends their cease-fire for another 60 days. Now, a series of practical steps are needed for traffic to pick back up through the shipping chokepoint.

Tanker traffic anchored near the Strait of Hormuz.

The U.S. and Iran reached a framework for peace last weekend that extends their cease-fire for another 60 days once it's officially signed - but don't expect the floodgates to instantly open to vessels carrying oil and other goods through the Strait of Hormuz.

Vessel movements are likely to ramp up following an expected deal-signing ceremony Friday, but a "reopening is not a recovery," analysts at data and analytics company Kpler wrote in a recent note. The strait is due to open "on paper" around June 19, but the first move is "purely mechanical," they said - noting that roughly 119 laden tankers were trapped inside the Persian Gulf. It could take 10 to 15 days to flush out the backlog, before delivering a spike in overall transits.

Thereafter, progress is expected to be gradual, with transits building from about 15 to 40 vessels a day over the first month, as "unresolved questions" surrounding sea mines in the waterway and Iran's control of the passage are worked out, the Kpler analysts said.

But for now, daily crossings through the Strait of Hormuz have been "about a handful" - not a big increase, said Matt Smith, Kpler's U.S. lead analyst. That reflects the risks of potentially being hit by a missile, drone or sea mines, and high premiums for vessel insurance coverage, he said.

With that backdrop, there are two key things that need to happen before traffic through the strait can return to something closer to prewar levels, according to experts: There needs to be more certainty around safe travel, and vessel war-risk insurance rates need to ease.

There also needs to be what Kpler calls "first movers." That refers to a "first group" of tankers or ship operators willing to cross the strait, likely with naval coordination and escorts. That would provide other vessels with the confidence to also make the journey.

Who goes first?

President Trump has claimed that the waterway will be "completely open" Friday - but who wants to go first?

Global markets are eager to restore normal operations as soon as possible, but vessel owners want to be confident that "navigational hazards" have been eliminated and that risks to vessels and crews have materially decreased, said Dennis Marvin, head of marine for property- and casualty-insurance provider MSIG USA.

Ultimately, vessel owners are the ones who will determine how quickly commercial traffic resumes through the Strait of Hormuz, he said.

Vessels still are likely to encounter "port congestion," as well as chartering and scheduling disruptions, said Sean Pribyl, a maritime attorney at Holland & Knight. If vessels have been waiting outside the Persian Gulf, there could be a surge in traffic, creating delays at loading and discharge terminals, he noted.

Meanwhile, some contracts involving those vessels - whether charter contracts or schedule adjustments - may need to be renegotiated given that circumstances have changed, said Pribyl, who's also a former U.S. Coast Guard officer.

Before the Iran war began on Feb. 28, Kpler data showed more than 100 vessels per day carrying oil and other goods would normally pass through the Strait of Hormuz, the narrow waterway between Oman and Iran. The U.S. Energy Information Administration estimated that more than a quarter of the world's seaborne oil trade flowed through the chokepoint in 2024.

Strait of Hormuz tanker traffic between Feb. 28 and June 16.

As of June 16, about 1,077 tankers - including carriers of oil, oil products, liquefied natural gas, liquefied petroleum gas and dry bulk - have transited through the strait since the war started, according to Kpler. That figure excludes container ships and cargo not carried in tanks. Normally, tanker traffic alone would number around 11,000 over that time frame.

Insurance costs

Trump on Sunday said the interim Iran agreement was "complete," but also threatened Wednesday to resume bombing Tehran if the kind of progress he wants to see isn't happening after 60 days.

Crew safety remains a primary concern for vessel operators, with some market estimates suggesting that around 1,000 commercial vessels and more than 20,000 seafarers have been affected by disruptions in the region, said MSIG's Marvin.

But the extra cost of operating in a war zone, on top of standard marine insurance, certainly has been turning heads. "War-risk premiums can add a significant incremental cost to a voyage, particularly when both premium rates and cargo values increase," said Marvin.

The value of cargo for tankers carrying oil, for example, has fluctuated greatly since the end of February - with prices for global benchmark Brent crude (BRN00) settling as high as $107.92 a barrel on May 4 and as low as $73.58 on March 2, according to Dow Jones Market Data.

Premiums are applied to the value of cargo being transported, rather than the vessel itself, Marvin noted. Reports indicate that war-risk premium rates were as low as 0.02% before the conflict, and around 1% to 2% during periods of heightened tension, he said. At the end of March, S&P Global reported that Gulf war-risk premiums fell to 1%, from 2.5%.

That would mean very large crude carriers, or VLCCs, transporting approximately 2 million barrels of crude oil could face additional premiums "in excess of $1 million for cargo war-risk coverage," Marvin said.

Doing the math, when oil prices were at their peak during the war, the value of cargo for a VLCC carrying 2 million barrels would be about $215.8 million. A war-risk premium of 2% of that cargo's value would be $4.3 million. Even at the lowest per-barrel price for crude during the war, that same cargo's war-risk premium would be roughly $2.9 million.

Insurance costs for oil tankers generally have been higher than for vessels carrying food, grains or fertilizer, because crude-oil cargoes have higher insured values, said Pribyl, the maritime attorney. Oil tankers also "present more strategically significant targets," he added. Still, all vessel types transiting the Strait of Hormuz have likely experienced elevated insurance costs.

For insurance costs to decline, insurers will need confidence that vessels can transit the strait "without threat of tolls, seizures or kinetic strikes," said Pribyl. That would only come with "demonstrated safe passage over a sustained period."

Tankers and shippers may have to deal with insurance coverage gaps, as some policies may have exclusions or waiting periods before war-risk coverage returns to normal rates, he added.

Realistically, while there may be an immediate uptick in transits, "a return to fully normalized operations could take weeks to months, depending on how quickly the safety situation stabilizes," Pribyl said.

-Myra P. Saefong

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06-18-26 0800ET