Strait of Hormuz Faces Severe Shipping Decline Amid Ongoing Conflict
Since the outbreak of conflict following U.S.-Israeli strikes on Iran on February 28, the Strait of Hormuz has seen a dramatic decline in maritime traffic. According to data from analytics firm Kpler, there has been a staggering 95% drop in shipping activity in the vital trade route, which spans 167 kilometers (104 miles). From March 1 to March 19, only 114 vessels crossed the strait, a significant decrease compared to peacetime levels. Of these crossings, 69 were oil tankers, with more than half carrying cargo, primarily heading eastward out of the strait. Richard Meade, editor of Lloyd’s List, noted that the current traffic is predominantly made up of bulk carriers, tankers, and container ships, with a recent uptick in gas carriers also observed.
Dominance of Iranian and Sanctioned Vessels
The majority of vessels navigating the Strait of Hormuz are either owned or flagged by Iran, accounting for a significant portion of the limited traffic. Greek and Chinese ships follow, making up 18% and 10% of crossings, respectively. Bridget Diakun, an analyst at Lloyd’s List Intelligence, emphasized that while Iran continues to control the strait and export its oil, other shipping activities remain largely stagnant. Notably, around one-third of the vessels transiting the strait are under U.S., EU, or UK sanctions, with over half of the oil and gas tankers affected. Since March 16, the traffic has been dominated by sanctioned vessels, shadow fleets, and gas carriers.
Strait of Hormuz Faces Increased Tensions Amid Ongoing Conflict
Despite the turmoil, commodities analysts at JPMorgan report that most oil passing through the strait is directed towards Asia, particularly China. The volume has decreased to over one million barrels per day, significantly lower than the pre-war level of nearly five million. Furthermore, 98% of the observable oil traffic is Iranian, averaging 1.3 million barrels daily in early March. There are indications that some vessels, including those from India and Pakistan, are navigating under Iranian approval, often taking routes closer to the Iranian coastline. This situation has prompted several governments, including China, India, and Pakistan, to engage in direct talks with Tehran to coordinate vessel transits.
Alternative Shipping Routes Gain Popularity
In response to the ongoing conflict and the challenges posed by the Strait of Hormuz, shipping companies are increasingly exploring alternative routes to transport their cargo. Major shipping firm CMA CGM has begun utilizing rail and road networks across Gulf countries to bypass the strait altogether. Marine intelligence group Windward has reported early signs of a global rebalancing in maritime traffic patterns, with transit volumes through the Bab el-Mandeb strait off East Africa surging by 280% and a 70% increase through the Suez Canal. These shifts indicate that the shipping industry is adapting to the current geopolitical landscape by seeking new corridors for trade. As the situation evolves, the implications for global shipping and energy markets remain significant, highlighting the strategic importance of the Strait of Hormuz in international trade.
