Shipping traffic through the Strait of Hormuz has plummeted to 33 vessels between Monday and Thursday, down from 50 in the previous week, according to Kpler data published by Reuters. Markets are closely monitoring ongoing talks between Iran and Oman to gauge any potential progress in reopening the critical global energy waterway following regional conflicts.
Crude Oil Traffic and Refinery Demand
Only four vessels transited the strategic strait on Thursday, according to Kpler data. Among them was the very large crude carrier Nissos Kea, which carried roughly 2 million barrels of Basrah crude loaded in Iraq. Additional shipping data shows that of the remaining vessels recorded that day, two carried liquefied petroleum gas and one operated as a minor bulk carrier.
Data from Kpler indicates that just six crude oil tankers have exited the strait this week. Meanwhile, a total of 21 vessels have entered the waterway, primarily utilizing the Iranian route. Despite the reduced traffic, several Chinese and Indian refiners actively sought vessels this week to enter the strait and load crude at Iraq’s Basrah Oil Terminal, drawn by steep discounts offered on the cargo, according to shipping sources.
Did You Know? Before Iran closed the waterway following the onset of the U.S.-Israeli war on February 28, approximately 130 to 140 ships typically transited the Strait of Hormuz daily.
Discounts and Insurance Hurdles
Tanker chartering has stalled despite aggressive pricing from producers. Shipping sources report that no vessels have been fixed so far because shipowners remain intensely wary of entering the active conflict zone. Iraq’s state oil marketer, SOMO, offered price discounts close to $30 a barrel for Basrah Heavy and Basrah Medium crude to customers booking for August loading.
Diplomatic efforts face heavy operational headwinds. A proposed deal between Iran and Oman to grant Tehran control over ships entering the Gulf through the Strait of Hormuz remains unworkable in practice, according to industry sources. The primary obstacles include stringent U.S. sanctions and restrictive insurance clauses governing maritime payments.
Red Sea Alternative Routes
As traffic through the Persian Gulf remains severely restricted, alternative shipping lanes show modest activity shifts. On Thursday, 26 vessels transited the Bab el-Mandeb strait on the Red Sea, marking an increase from 19 vessels the previous day, according to Kpler data. Concurrently, LSEG recorded 28 vessels in the same area using a distinct tracking system and methodology.
Frequently Asked Questions
Why has shipping traffic dropped in the Strait of Hormuz?
Traffic fell significantly after Iran closed the waterway following the start of the U.S.-Israeli war on February 28, leaving shipowners reluctant to enter due to security risks and insurance limitations.
How large are the crude discounts offered by Iraq?
Iraq’s state oil marketer SOMO offered discounts of close to $30 a barrel for Basrah Heavy and Basrah Medium crude for August loading to attract buyers.
What alternative maritime route are vessels using?
Some shipping traffic is registering shifts through the Bab el-Mandeb strait on the Red Sea, where tracking data recently recorded between 26 and 28 transits in a single day.
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