Even if the vital Strait of Hormuz fully reopens and oil along with other essential cargo begins to sail out, it will not be enough to restore normalcy. Reopening the waterway itself is proving difficult.
Experts say shipping lines will not re‑enter the Persian Gulf through the strait while the risk remains that the ceasefire is only temporary. That’s because empty ships must sail back into the strait to keep goods moving.
Tankers and ship owners — as well as their insurers — won’t allow their ships to re-enter the Gulf unless they’re sure they won’t be caught there for weeks or longer, said Lale Akoner, a global market analyst at eToro.
“A two-week ceasefire and a ceasefire that’s fragile — I don’t think that would give the confidence (to ship operators) that is needed,” she said.
Without new ships entering the Gulf to pick up the next loads of oil, fertilizer and other much-needed cargo, the benefits of hundreds of fully loaded ships sailing out of the strait will prove to be short-lived.
Without new ships entering the Gulf to pick up the next loads of oil, fertilizer and other much-needed cargo, the benefits of hundreds of fully loaded ships sailing out of the strait will prove to be short-lived.
The shortages and elevated prices for oil and other goods are likely to continue for months, reports CNN online.
According to Matt Smith of trade analytics firm Kpler, ships trapped in the Gulf must first be allowed to leave before things can get back on track. So far, that hasn’t happened.
“(Almost) nobody is confident enough to pass through the strait,” he said. The 100-plus oil tankers that typically move through the Strait of Hormuz every day, have been reduced to 10 or fewer, Smith noted.
Even if there is confidence in the ceasefire, the flow of vessels is going to be overwhelmingly outbound ships. Smith said there are about 400 loaded oil tankers in the Gulf waiting to get out, but only about 100 empty tankers eager to get in.
Smith said if the strait were to open today, it would still likely take until July for oil flows to get back to normal. The same is true with container ships that are critical for delivering food and other goods the Gulf states depend upon, as well as exports like fertiliser and industrial resins.
There are about 100 container ships waiting to exit, but virtually none waiting to enter, said Peter Tirschwell, vice president for maritime and trade at S&P Global Market Intelligence.
That means 30 percent of the world’s fertiliser that normally comes out of the region is likely stuck there for months until there are new ships to take them out, he said. As with the oil, sending that cargo out by ship is the only way to move it.
“The capacity does not exist to easily reroute those cargoes,” he said. Without new ships coming through the strait and into the Gulf, experts say production of various goods made there — crude oil, gasoline and other refined fuels and fertilizer — will remain on hold.
Production halted during the past six weeks because there was no place to put those goods, said Smith.
The oil producers around the Gulf “are used to just putting (oil) on a tanker and it immediately going out,” he said. “They’re going to need time to increase production, but also have the tankers in place there to be able to load that crude.”
