The effective closure of the Strait of Hormuz has wreaked havoc on the global fleet of oil and gas tankers. Freight rates have skyrocketed, marine insurers have canceled policies, and a huge chunk of tanker tonnage capacity is essentially trapped in the Mideast Gulf. Shippers are already making use of alternative routes out of the region, but these are constrained and face security challenges of their own. US attempts to soothe tanker owners and operators appear to be falling short. It is the latest test of the shipping market’s resilience and adaptability in the face of crisis. The strait typically sees dozens of vessels pass through each day. But transits through the critical chokepoint virtually ground to a halt within 24 hours of the launch of the US-Israeli bombing campaign against Iran, with only a handful of vessels, carrying negligible volumes of oil, exiting the strait since the war started Feb. 28; empty vessels, too, are stalled, for fear of attacks. Even those operators who might be willing to risk crew safety likely would not be able to access risk insurance, since at least four major insurers have canceled such policies in the region. Ship tracker Kpler tallies some 171 million barrels in tanker tonnage capacity currently locked up in the region, of which 96 million bbl is loaded with crude, leaving little room for loadings to continue. That means some 10% of the regulated very large crude carrier (VLCC) fleet is stuck in hostile waters. Meanwhile, ballast vessels have diverted away from the Mideast Gulf — even if the war ends immediately, it would take time for the tonnage situation to normalize.
