Trump says the Strait of Hormuz is reopened. But most ships are staying put

Trump Claims Strait of Hormuz Reopened, but Industry Skepticism Lingers

Trump says the Strait of Hormuz – President Donald Trump asserted on Monday that the Strait of Hormuz, a crucial maritime passage for global oil trade, has been fully reopened under a new agreement with Iran. The claim came after a deal was reached on Sunday, which Trump described as a significant step toward stabilizing the region. However, shipping industry insiders are expressing caution, questioning whether the strait is truly clear of threats or if the situation remains volatile. While the administration is optimistic, the reality on the water suggests a more gradual shift in activity.

Industry Uncertainty Over the Agreement

Despite Trump’s confident declaration, experts monitoring maritime traffic noted that most vessels have not yet resumed movement through the strait. “Ships are beginning to pass through, but the majority are still waiting for further clarity,” said one industry analyst. The lack of detailed information about the terms of the deal has left operators uncertain about the safety of the route. “The agreement’s specifics are still unclear, and without definitive assurances, commercial vessels will remain cautious,” explained Jakob Larsen, chief safety and security officer at the Baltic and International Maritime Council (BIMCO).

“Due to the absence of concrete details and a pattern of optimistic assurances, the shipping industry continues to face a high level of risk,” Larsen added. He emphasized that shipowners need concrete proof of secure pathways before committing to transit. “The next step is for operators to be fully confident that the strait is not only open but also protected from potential threats.”

Historical Context and Current Traffic Trends

Even during the height of the conflict, some ships have managed to traverse the strait, though volumes have been significantly reduced. Natasha Kaneva, head of global commodities strategy at JPMorgan, highlighted that commercial traffic has remained low despite ongoing operations. “Crude oil and petroleum products are still moving through the strait, but at a much slower pace than normal,” she wrote in a recent client note. This trend mirrors previous periods when tentative agreements led to a surge in vessel departures once the immediate danger seemed to subside.

Bob McNally, founder and president of Rapidan Energy Group, noted that only a fraction of the usual oil flow is currently passing through the strait. “Between 0% and 10% of normal traffic has been able to navigate the waters, which has helped prevent oil prices from rising further,” he told CNN. The cautious approach of operators is understandable, given the history of disruptions and the potential for renewed attacks. However, the recent agreement has raised hopes of a more stable environment, prompting some to reconsider their risk assessments.

Market Reactions and Insurance Challenges

The announcement of the deal led to immediate market responses. Oil futures dropped to a three-month low on Monday, reflecting optimism about increased supply. Yet, Kpler, a leading maritime analytics firm, reported that its data shows minimal movement through the strait. “There has been no significant uptick in traffic, with 220 tankers and nearly 500 ships still stranded in the Persian Gulf,” said Matt Smith, lead oil analyst at Kpler. The delay in signing the formal agreement until Friday has contributed to this hesitation, as operators await confirmation of the terms.

“This isn’t unexpected, as the finalization of the deal is still pending,” Smith explained. “It will likely take three to four months before we see consistent, normal levels of activity.” He pointed out that without clear guidelines on safe distances between ships and naval support, many operators will remain on the sidelines. “Maritime insurers have also not shown a readiness to cover risks associated with the strait, creating a bottleneck for movement.”

Insurance is a critical factor in maritime operations, and the absence of updated coverage has dampened confidence. Major insurers, including Skuld, have not indicated any changes to their policies regarding attacks in the region. “Market-wide rate adjustments, particularly for war-risk premiums, depend on the assurance of safe passage,” Skuld stated. This uncertainty has kept the strait’s traffic at a low level, as shipowners weigh the potential costs of insurance against the risks of transit.

Strategic Implications for the Shipping Industry

Analysts agree that the agreement’s success will hinge on its implementation. While Trump highlighted that “work is underway to clear the remaining obstacles,” including a few mines already identified, the broader picture remains complex. “Ships are now beginning to exit the strait, but the full reopening requires more than just mine removal,” Trump stated during a meeting with French President Emmanuel Macron at the G7 summit. “By Friday, the strait will be completely open.”

Larsen from BIMCO reiterated that the deal must provide more than symbolic relief. “Operators need tangible evidence that the routes are free of threats and that naval protection is in place,” he said. This includes protocols for maintaining safe distances between vessels, which are essential for preventing collisions and ensuring efficiency. “Without these details, the confidence of the industry will not be restored,” he emphasized.

Future Outlook and Industry Hesitation

The shipping industry’s response to the agreement has been mixed, with some operators expressing cautious optimism and others remaining skeptical. “There’s a risk that even with the deal, the strait will remain a bottleneck for weeks or months,” said McNally. This hesitation is partly due to the history of miscalculations and the lingering fear of sudden disruptions. For instance, during previous agreements, ships initially moved quickly but slowed as new threats emerged.

As the situation evolves, the focus will shift to verifying the agreement’s terms. “If the strait is indeed secure, we can expect a gradual increase in traffic,” Larsen said. However, until that happens, the majority of ships will likely continue to operate at a reduced capacity. “The key is to ensure that the measures outlined in the agreement are both effective and communicated clearly to all stakeholders,” he added.

The Strait of Hormuz has long been a strategic lifeline for global energy markets, with approximately 20% of the world’s oil passing through it daily. Its reopening is expected to alleviate pressure on prices and restore confidence in the region’s stability. Yet, the current situation underscores the delicate balance between political agreements and operational realities. While Trump’s administration is pushing for a swift resolution, the shipping industry’s cautious approach highlights the need for thorough verification before full-scale resumption of activity.

As the days pass, the focus will remain on whether the agreement translates into practical safety measures. “The chicken-and-egg scenario continues,” Smith said. “Operators are waiting for insurance coverage to follow, while insurers are hesitant to commit without guaranteed security.” This dynamic may delay the return to normalcy, even as political leaders tout progress. For now, the Strait of Hormuz remains a symbol of both hope and uncertainty in the global energy landscape.