Look for the Strait of Hormuz to Be Closed Again as Traffic Dwindles: The summer driving season is here, and you may soon be paying more for gasoline. The Iranians are closing the Strait of Hormuz, and oil tanker traffic is once again stalled. Two weeks ago, it looked like things were better in the strait. Oil and natural gas were transiting regularly through the strategic waterway, and crude prices dipped lower. This was seen as an excellent development in a world plagued by a shortage of hydrocarbons due to the war in Iran.
Now the ceasefire is over, and the Americans and Iranians are trading air strikes. President Donald Trump is livid that Tehran ordered an attack on three tankers early this week. The Americans have responded militarily over the last 48 hours, and Iran has hit U.S. Gulf allies such as Jordan, Kuwait, and Qatar hard.
An F/A-18F Super Hornet Strike Fighter Squadron 103 is parked on the flight deck of the aircraft carrier USS Dwight D. Eisenhower (CVN 69) as the ship operates in the Arabian Sea on Dec. 5, 2006. The Eisenhower is in the Arabian Sea in support of maritime security operations.
Ship Traffic Has Ground Down to a Trickle
Bloomberg said on July 9 that only one very large tanker was moving through the strait. This was going through the Iranian-controlled route. The U.S. controlled route that skirts Oman saw no ships moving.
Fourteen tankers transited the Strait on Wednesday, Bloomberg noted. An average of 34 oil-carrying vessels made it through per week after the ceasefire and the Memorandum of Understanding were agreed upon. Fifty-nine passed through the strait on June 24, and the Joint Maritime Information Center estimated that 138 ships were making their way across the strait before the war started in late February.
Price of Oil Could See a Spike Soon
West Texas Intermediate crude was down slightly on July 9 at 12noon ET, trading at $72.71 per barrel. The average price of gasoline in the United States is around $3.85, according to AAA. Oil has risen 5.37 percent over the last seven days.
Slapping a Toll on Commercial Shipping
For years, oil tankers have crossed the strait without incident. Now Iran may impose a toll on commercial ships that could trim the profits of cargo and oil shipping companies. Twenty percent of the world’s oil and gas is carried across the strait, plus a significant supply of fertilizer.
USS Blue Ridge (LCC-19). Image Credit: U.S. Navy.
Tehran Is In Control of the Strait of Hormuz
Iran has maintained the right to regulate traffic in the Hormuz region. The country believes that the waterway is its sovereign territory. Expect the Iranians to choke off the number of ships that transit starting today and into next week.
After the ceasefire broke on July 8, Iran has overseen ships make U-turns in the strait and head back to safety. Crews on oil tankers are especially worried that Iran could attack again.
Dangerous Passage Crimps Traffic
Iran also set up a route it wants ships to use, closer to its borders. This allows it to witness firsthand as a vessel passes by and lets its mosquito fleet of swift boats dart around the ship. Iran determines what constitutes a safe location for sailing and what does not.
“The only safe route for the passage of commercial ships and oil tankers in the strait is the route determined by the Islamic Republic of Iran,” Iran’s top military commander, Khatam al-Anbiya, said after this week’s attacks, BBC reported.
Sailing Close to Oman Is Safer
International observers recommended that oil tankers instead take a different route closer to Oman, to the south of the strait, where Iranian swift boats and sea mines are not present.
Can Negotiations Fix the Mess?
The Memorandum of Understanding was an agreement requiring Iran to grant commercial ships a reprieve from attacks. Tehran was supposed to allow all vessels to transit the strait safely. It is unclear whether the Americans and Iranians will need to renegotiate a new MoU before traffic in the strait resumes.
The BBC interviewed Martin Kelly, a senior intelligence analyst at the security firm EOS Risk Group. “There will now be a bit of back and forth between the US and Iran before they make friends again; shipping will peak and trough cautiously until Iran attacks another ship and the cycle starts again,” he said.
Oman is the key to a new agreement that could allow ships to continue sailing through the strait, although the Omanis believe fees will still be imposed on vessels before they can pass through the waterway.
Watch Out for Sea Mines and Air Strikes
Sea mines laid by Iran are another problem that shipping firms fear. Iran has ensured that many routes are mined, allowing greater control. The swift boats are another issue of concern. Plus, Iran can use missiles and drones to attack the ships going through the strait.
What Happens Next?
Look for more days of crimped traffic. The Iranians have the upper hand now, and new talks must convince Tehran not to interfere with shipping. Trump’s national security team is huddling, trying to devise a path forward. New U.S. strikes are important to the strategy of armed diplomacy, but whenever the Americans are not behaving well, Iran believes it has grounds to block tankers and cargo vessels.
The next 48 to 72 hours will be critical for tracking the number of ships stalled and unable to cross the strait. This could roil international oil markets and send crude prices higher. If the Iranians and the Americans enter a period of all-out war, this could mean more pain at the pump for many in the West.
The United States is in the process of reimposing sanctions and may instigate another blockade of Iranian ships that carry oil to East Asia. This tit-for-tat pattern of military strikes is grounds for Iran to block the strait, too. Thus, Iran has leverage in talks and time on its side, and ordinary Americans are growing more frustrated as the war resumes.
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About the Author: Dr. Brent M. Eastwood
Author of now over 3,500 articles on defense issues, Brent M. Eastwood, PhD, is the author of Don’t Turn Your Back On the World: A Conservative Foreign Policy and Humans, Machines, and Data: Future Trends in Warfare, plus two other books. Brent was the founder and CEO of a tech firm that predicted world events using artificial intelligence. He served as a legislative fellow for US Senator Tim Scott and advised the senator on defense and foreign policy issues. He has taught at American University, George Washington University, and George Mason University. Brent is a former US Army Infantry officer. He can be followed on X @BMEastwood.
