Ships Cluster Further From Hormuz Strait as Iran Widens Control
(Bloomberg) -- Hundreds of vessels were seen clustering near Dubai on Tuesday, as more ships moved away from a still-empty Strait of Hormuz in response to Iran’s efforts to widen its area of control.
A ceasefire between the US and Iran has begun to look increasingly fragile, with the two sides exchanging fire even as the US said it had opened a passage through the waterway and CBS reported two American destroyers had crossed into the Gulf.
Crew members have reported hearing radio broadcasts warning vessels of new boundaries defended by the Islamic Revolutionary Guard Corps. Attacks on the United Arab Emirates port of Fujairah, meanwhile, underlined an expanded Iranian command zone — and kept the strait largely devoid of traffic in the early hours of the day.
Dubai would fall just outside the new Hormuz control area defined by Tehran, which extends to the south to Umm al-Quwain, along the United Arab Emirates coast.
“The US is attempting to level the power balance in the strait and that’s been reciprocated against by Iran. It’s escalation,” said Anoop Singh, global head of shipping research at Oil Brokerage Ltd. “I’m not expecting a quick reopening of bi-directional flows through the strait.”
Hormuz, a vital energy thoroughfare, has become a flashpoint in the nine-week war. Traffic has dwindled since the start of US and Israeli strikes on Iran, but it oscillates each time one side has tried to adjust levels of control.
The number of daily Hormuz passages is currently at near zero — compared to around 135 each day before the war.
The extended lockdown of Hormuz has already upended global freight markets, with decades-old benchmarks turning irrelevant overnight and at least one trading giant suing the index publisher for losses. If the US succeeds in guiding more ships out of the strait, the prospect of an exit for the hundreds of oil and chemical carriers trapped in the gulf could alleviate pressure on the market, said Singh.
Events so far this week, however, have only encouraged caution from the shipping industry. Abu Dhabi National Oil Corp confirmed on Monday that its supertanker, Barakah, was hit by drones while in Hormuz, and South Korea said that one of its ships was targeted for the first time during the war.
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