The recent Iran-US peace agreement has done little to alleviate shipping concerns over navigation through the Strait of Hormuz, a vital chokepoint accounting for 23% of global seaborne oil and gas transit. Despite the much-anticipated deal, market analysts forecast that trade volumes may not recover until early next year.
According to data from Refinitiv, the average daily volume of vessels transiting the strait has been significantly impacted since the US airstrikes in late February, plummeting by as much as 75%. This decline has led to a sharp increase in oil and fertiliser prices, with Brent crude rising to $68.50 per barrel and nitrogenous fertilisers spiking by over 20% in recent months.
The Memorandum of Understanding's ambiguous nature is a significant contributor to the shipping industry's hesitation. US Vice President JD Vance confirmed earlier this week that several unresolved issues within the agreement are still pending, further casting uncertainty on trade resumption.
UK Chamber of Shipping policy director Peter Aylott warned against expecting an immediate return to normal trade levels, stating that while some members may begin moving vessels once the agreement is signed, many will not. Their risk assessments demand a 'clear and robust ceasefire' before considering safe passage, with UK-owned vessels among those stranded in the Gulf due to fears of seizure or sea mine encounters.
Under optimistic scenarios, Mr Aylott suggests it will take several months for shipping firms to regain confidence in navigating the strait. He notes that a return to pre-conflict volumes – approximately 150 vessels entering and exiting daily – is unlikely this year, given the complex nature of US-Iran negotiations.
The UK Foreign, Commonwealth & Development Office (FCDO) maintains its travel advice for maritime operations in the region, advising extreme caution and adherence to international maritime security guidelines. As a result, shipping companies are likely to exercise restraint until further notice, thereby limiting trade growth in the immediate future.