Hormuz ship traffic falls as US-Iran fighting disrupts oil route

Ship movements through the Strait of Hormuz have fallen sharply after President Donald Trump’s blockade took effect last week, tightening pressure on a waterway that carries roughly one-fifth of global oil consumption. Lloyd’s List Intelligence said transits dropped 66% in the week through July 20, while other shipping data showed operators cutting Gulf voyages as US-Iran fighting intensified.

The decline reflects a rapid reassessment by shipowners after renewed US strikes on Iran, Tehran’s declaration of a broad ban on maritime traffic and fresh attacks on commercial vessels. The strait links Gulf producers to global markets, so a fall in tanker and gas carrier traffic can quickly affect crude oil and liquefied natural gas logistics, even before any direct change in production.

Lloyd’s List Intelligence recorded 53 vessel crossings in the week through July 20, compared with 157 in the previous week. Movements by tankers and gas carriers, the ships that carry most Gulf crude and LNG, fell to 30 from 90 over the same period.

Kpler data showed a similar deterioration soon after the blockade began. Daily crossings had averaged more than 20 vessels before July 15, according to Kpler, then fell to 16 on that date and moved into single digits on July 16. Traffic stayed weak for the rest of the week, with only intermittent rebounds.

The latest pullback interrupts a period of gradual recovery after a mid-June ceasefire had encouraged some companies to resume Gulf sailings. That reopening has now stalled as owners, charterers and insurers weigh the risk of entering or leaving the Gulf.

Bridget Diakun, senior risk and compliance analyst at Lloyd’s List Intelligence, said activity had slowed substantially after tensions resumed. She said some tankers were still moving through the channel, because operators differ in their tolerance for risk, but traffic had not returned to normal levels.

Diakun said vessel movements were likely to come in uneven waves rather than a smooth recovery, as companies use short periods they judge to be safer and then retreat when security conditions worsen.

S&P Global data also pointed to reduced traffic. It counted 40 ships passing through the strait from July 17 to July 19, or about 13 per day, and said weekly volumes through July 19 were down almost 50% from the previous week.

Commercial vessels still made up more than 70% of traffic during that period, according to S&P Global, although only about one-third were assessed as compliant with maritime restrictions. Iran-linked and sanctioned vessels continued to account for many movements, suggesting larger international operators remained cautious about returning.

Saul Kavonic, head of energy research at MST Marquee, told CNBC that expectations for a quick reopening of the strait had been too optimistic. He said the renewed hostilities and reimposed blockade had pushed the conflict back toward escalation, with flows through Hormuz down to about 15% of pre-war levels.

Kavonic said oil could test $100 a barrel again if fighting continues at its current intensity for several weeks or if regional energy infrastructure is attacked. That assessment was presented as a market risk scenario, not a confirmed outcome.

This story draws on original reporting from CNBC.