Shipowners on Edge for News on Hormuz as Dark Flows Keep Rising

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(Bloomberg) — Shipowners are watching warily for a peace deal between the US and Iran and what it would mean for the Strait of Hormuz, with some tanker owners expressing caution, while others were already predicting a frantic free-for-all if the waterway opens in earnest. 

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There are about 127 oil tankers currently inside the Persian Gulf, according to Signal Maritime data — although it warns the figure is hard to be confident of. Dozens of others have positioned themselves near the strait, to be ready to take advantage of a surge in demand if traffic resumes. 

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The global energy market was pitched into turmoil when the start of the war led to the effective closure of the waterway, which usually handles about a fifth of the world’s oil and liquefied natural gas. 

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While that move threatened a major energy price shock, trade flows have since reorientated, governments have taken emergency measures, and a growing stream of oil is now sneaking out of the waterway under cover of darkness. Those shifts mean that while the reopening of Hormuz will still be significant, prices have already heavily retreated from their highs.

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Read: Oil Tankers Go Dark to Sneak More Barrels Through Hormuz 

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And even if a deal is signed, it’s still unclear what “reopening” of the strait may actually look like. While Trump said ships will have free passage, Iranian media has suggested Tehran will still have a degree of control. Bloomberg reported on Friday that the text of the memorandum of understanding would be open to interpretation in certain areas, according to a person familiar with the matter, including what the reopening of the strait would mean in practice. 

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Several shipowners said they’d likely take a wait-and-see approach, noting that a resolution has seemed close in the past and then failed to materialize — including two months ago when both sides declared the strait was open, only for Iran to fire on vessels less than 24 hours later. Some cited recent crew deaths as a result of US strikes as a reminder of the risks of crossing.  

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But some also said that once it did become clear that Hormuz was fully open, there would likely be a rush for the exit and queues near its entrance. 

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In the event of a resumption of regular flows, it would spell a sudden flood of oil back onto the market as barrels that have been trapped in the Persian Gulf since the start of the war escape, and as Middle Eastern producers look to empty storage tanks that have filled up since the conflict began. 

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Industry bodies have warned that extreme levels of traffic in Hormuz would raise the risk of crashes and ships running aground.

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“There will be a little bit of a stampede,” if Hormuz reopens, said Amrita Sen, co-founder of consultant Energy Aspects.

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Dark Flows Rising

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Even without a peace deal, there have been growing signs that significant volumes of oil are flowing through the strait in tankers with their signals switched off — including with assistance from the US military.