China Tankers Join Line to Test Hormuz Exit and Iran Truce

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(Bloomberg) — Two fully laden Chinese oil tankers are waiting outside the Strait of Hormuz, putting them in a position to become the first such vessels to leave the Persian Gulf under a day-old US-Iran ceasefire, even as shipowners scrutinize the status of the narrow waterway.

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The Cospearl Lake, linked to China’s state-owned Cosco Shipping, and He Rong Hai, owned by a smaller entity, appeared to be traveling east early on Thursday morning at near top speeds, according to ship-tracking data, before coming to a virtual halt. Both are signaling Chinese ownership on their tracking systems, a move typically done for safety during Iran-approved transits.

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The Chinese oil tankers are part of a growing armada amassing at the entrance to the strait, off the United Arab Emirates. Indian-flagged Desh Vibhor is fully laden with crude off the coast of Ras Al Khaimah, signaling government of India ship and crew in their destination. A Saudi Arabian-flagged VLCC, the Jaham, is also steaming east toward a nearby holding area off Dubai.

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The Chinese vessels’ position is indicative of a desire to cross the strait, but not a guarantee, as others have approached only to turn back at the last moment.

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Iran and the US agreed to a pause in fighting in exchange for the opening of the strait, but there is still little clarity on what was agreed. Continued attacks — including Israeli strikes in Lebanon — have raised questions about the effectiveness of the agreement. Since the truce — and supposed opening of the strait — was agreed a day ago, there has also been little change in traffic.

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President Donald Trump on Tuesday announced a “COMPLETE, IMMEDIATE, and SAFE OPENING”. Iran, by contrast, has said its armed forces will control traffic and has since sent broadcasts informing ships the strait remains closed. It has also designated safe routes for vessels entering and exiting the strait.

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Japan’s Mitsui OSK Lines Ltd., one of the world’s largest shipping companies, is among the groups trying to understand the fine print and arguing it needs to see “sustainable stability” before sending its vessels through.

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“How it is implemented in the water, that is something we really need to understand,” Jotaro Tamura, the firm’s new president, told Bloomberg Television.

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The Chinese ships are already notable for their cargoes. One is carrying Iraqi crude, and the other Saudi. While Iran has referred to “brotherly” Iraq, most other transits have been granted to friendly nations.

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Cospearl Lake’s passage, however, would also mark the first such attempt by a Cosco oil tanker in the six-week war. Cosco, like other large shipping firms, tends to be conservative, and its crude carriers have been trapped since US and Israeli strikes on Iran began, prompting Iran to all but close Hormuz in retaliation.

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The two very-large crude carriers idled in the middle of the Persian Gulf as part of a group of tankers for most of March. On Thursday morning, they began sailing eastward at speed, before eventually slowing and stopping just at the entrance to the strait.