LONDON

Maritime trade in the Strait of Hormuz technically continues, albeit in a very limited manner, with some vessels granted passage for a one-month period, while uncertainties over the future of the vital waterway keep growing.

It has been more than a month since the start of the US and Israel’s preemptive war with Iran on Feb. 28 and the trade disruption in the Strait of Hormuz, as Tehran effectively closed the transit corridor in retaliation for the joint attacks, while the tightening trade and supply chains threaten many layers of the global economy, ranging from energy to food.

There have yet to be any significant improvements in the vessel traffic through the Strait of Hormuz. An average of 129 vessels transited through the strait daily on Feb. 1-27, before the war started, while this figure plummeted with sharp declines throughout March, with daily averages now 95% lower than pre-war levels, according to the UN Conference on Trade and Development (UNCTAD).

Out of the 292 commercial vessels that passed through the vital waterway between Feb. 28 and March 31, 147 of them were found to be empty. Three were carrying crude oil, 38 had dry cargo, 32 were carrying refined and unrefined petroleum products, and 20 were liquefied petroleum gas (LPG) carriers.

Among other ship types, some five were methanol carriers, two chemical product carriers, two container ships, and one each of liquefied natural gas (LNG), biofuel, and ethanol carriers.

On the day of the strikes, 78 commercial vessels transited through the Strait of Hormuz, while many vessels in the strait or heading toward it turned back amid rising tensions, according to the real-time ship tracker MarineTraffic.

Only 30 commercial vessels passed through the strait on March 1, while some 12 transited on March 3, but this figure dropped to only three vessels on March 3, rising again to 12 on March 23.

Some 15 vessels passed through the strait on March 28, with five of them Iranian, three from Panama, two from the Marshall Islands, and another two being Indian-flagged vessels, while the other ships were flying the flags of Pakistan, Antigua and Barbuda, and Liberia, the data showed.

The Liberian-flagged bulk carrier Andermatt reportedly broadcast “Santos food for Iran” as its destination in the Automatic Identification System (AIS) while it passed through the Strait of Hormuz on March 24, marking a situation where changing AIS information ensured safe passage.

A total of six ships, including two container ships, passed through the strait on March 30, and some five vessels passed on March 31.

On March 31, out of the ships transited through the strait, only one was loaded with crude oil products, while the rest were empty. Two of these vessels were Liberian, one was Saint Kitts and Nevis, and the others were Barbados and the Marshall Islands-flagged.

Nearly all vessels that Iran permitted to pass through the Strait of Hormuz were headed to Asian countries, and these ships mostly carry petroleum products, including oil and LPG, and dry cargo.

Reports estimate that a massive portion of the tankers passing through the waterway are carrying Iranian oil.

Oil trade between India and Iran reignited during this period, following Washington’s 30-day easing of at-sea Iranian oil due to supply disruptions — the crude oil tanker Ping Shun set sail for the western Indian port and refinery region of Vadinar with 600,000 barrels of crude oil aboard, according to the data analytics firm Kpler.

This shipment, expected to arrive in Vadinar on April 4, marks the first Iranian oil India will have received since May 2019, coming at a critical time when Indian refineries are struggling with diminishing stockpiles.

Despite it all, the future of commercial vessel traffic through the Strait of Hormuz grows more and more uncertain — while some vessels are permitted to pass, albeit only those that reportedly have been primarily navigating via a corridor through Iranian territorial waters, a new bill proposing tolls for transit through the corridor passed the security committee of Iran’s parliament this week.

Financial regulations and transit fees based on the Iranian rial, a ban on countries participating in unilateral sanctions against Iran, the enforcement of Iran’s role and its authority of armed forces, ensuring the security of the straits and maritime transport, environmental issues, and legal cooperation with Oman are involved in the bill’s provisions, according to the Fars News Agency.

The bill is pending approval by the relevant committee, the parliament, and then the Guardian Council, before being signed into law by the country’s president.

- Broader trade bottleneck

The Strait of Hormuz accounts for 20% of global oil demand and LNG transit, and its effective closure is pressuring not only the energy sector but also the fertilizer trade and food systems.

With Brent crude oil rising nearly 50% in a month, gas prices in Europe and LNG prices in Asia surged.

The sharp rise in gas is key for fertilizers since natural gas is an essential input in the production of nitrogen-based fertilizers like urea and ammonia — with gas prices on the rise, increasing production prices, and driving up fertilizer costs.

The Middle East’s role transcends the energy market, as the region is also a major producer of sulfur used in phosphate-based fertilizers, while serving as a central hub for global fertilizer trade, according to the UNCTAD.

Around one-third of the fertilizer volume is transported by sea through the Strait of Hormuz.

Any disruptions in the vital waterway threaten not only production costs but also the logistics flow and the continuation of supply chains.

* Writing by Emir Yildirim in Istanbul.