The funeral procession for Ayatollah Ali Khamenei may have concluded, but its aftermath has seen Iran's grip on the strategic Strait of Hormuz tighten with alarming speed. As Tehran mourns the loss of its supreme leader, whose legacy is inextricably linked to the country's dominance over this vital global waterway, the Islamic Revolutionary Guard Corps (IRGC) has been flexing its muscles.
In recent days, as vast crowds gathered in Tehran for Khamenei's funeral, the IRGC has seemingly moved to re-establish its dominance over the strait. Previously, a growing number of ships had begun utilising a US-supported southern passage near Oman's coastline to circumvent Iranian-controlled northern routes, which are perceived as more volatile due to potential mining. However, on Saturday, at least eight ships reportedly reversed direction following direct warnings from the IRGC, with shipping traffic further decreasing on Sunday.
Data from shipping monitor Marine Traffic indicated a 10% day-on-day decline in confirmed crossings through the strait on 2nd July, with a notable shift towards Iranian-preferred and 'dark' or 'unknown' corridors, while the Omani route saw diminished use. This escalation has drawn international attention, particularly from the UK and France, which had agreed to deploy a mine-clearing naval force to clear the southern route – an initiative swiftly condemned by the Iranian foreign ministry as unwarranted interference.
Concurrently, the UK Maritime Trade Operations (UKMTO) centre reported a distress signal from a vessel in the Red Sea, off the Yemeni port city of Hodeidah, following an attack by 'unknown armed assailants,' an incident currently under investigation. The situation has significant implications for British trade and security interests.
Economically, the current global oil market has seen prices fall by as much as 40% from a high of $125 per barrel to approximately $75 per barrel, mitigating inflationary pressures on Western economies. However, the instability in the Strait of Hormuz poses a potential future risk to energy supplies and pricing, despite current market conditions.
A memorandum of understanding signed digitally by the US and Iran on 17th June aimed to restore traffic levels and prevent Iran from imposing tolls for 60 days appears to be functioning more as a set of loose objectives rather than binding regulations. Both sides are reportedly using this ceasefire period to strengthen their military positions, contrary to a US commitment in the memorandum to withdraw forces from the immediate vicinity. Oman has also been engaged in discussions with Iran, France, and the UK regarding future governance of the strait, proposing a plan for optional navigational fees similar to those in the Strait of Malacca.