What happens when the Strait of Hormuz reopens?

The Strait of Hormuz, a critical global shipping channel through which approximately 20% of the world's crude oil passes, is set to reopen after nearly four months of closure caused by the ongoing conflict involving Iran, the United States, and its allies. This development follows the signing of a U.S.-Iran agreement aimed at ending the Middle East war. While the immediate reopening of the strait marks a significant milestone, experts suggest that restoring full maritime operations and returning to pre-war conditions will take considerable time and effort.

Ships that have been stranded in the Gulf for months are expected to begin moving through the strait once formal approval is granted. According to Jakob Larsen, head of security at Bimco, crews have likely performed routine maintenance and drills to keep their vessels operational. However, some ships might need underwater hull cleaning to remove marine growth that has built up during the shutdown. Approximately 500 ships and 20,000 seafarers have been stuck in the region, according to the International Chamber of Shipping.

Initially, operators are anticipated to exercise caution, potentially requiring naval escorts for safety. Hugo Rousse of AXSMarine noted that shipowners who manage their fleets independently and are not publicly traded may be the first to navigate the strait. Tankers from countries such as Kuwait, Iraq, the UAE, and Saudi Arabia are likely to lead the resumption of transit. Despite the potential for delays, the high demand for tanker services suggests that war risk insurance will not pose a major barrier to movement.

Before the strait can fully function as it did prior to the conflict, several logistical challenges must be addressed. Iran has marked the central part of the strait as a mine danger zone, meaning that until mines are cleared, ships will have to use coastal traffic lanes that are safer but less efficient. France and Britain have been assembling a coalition to clear the mines and restore shipping flows. Additionally, the United States has requested assistance in deploying mine-clearing capabilities, with European sources indicating that French and German vessels have already been mobilized for this task.

While the reopening of the strait represents progress, the transition back to normalcy will involve multiple steps. Crew changes, disrupted supply chains, and the replenishment of strategic energy reserves are just a few of the factors that will influence the pace of recovery. Analysts estimate that it could take four to six months before crude export volumes reach their previous levels. Some buyers have already sought alternative suppliers and established new shipping routes, which means that the return to pre-war conditions will not occur instantly.

Regarding financial aspects, U.S. Vice President JD Vance mentioned that the agreement includes provisions for the strait to remain open in a toll-free manner for the long term. However, Iran's foreign ministry indicated that the deal allows for the collection of maritime service fees instead of traditional tolls. These fees could raise concerns for shipping companies, as they may indirectly support Iran's Revolutionary Guard, which several nations classify as a terrorist organization. This aspect introduces complexity into the otherwise positive developments surrounding the strait's reopening.

Despite the agreement being signed by both the U.S. and Iran, the implementation process has faced delays. Peace talks originally scheduled in Switzerland were postponed, with no new date announced. The cancellation of U.S. Vice President JD Vance's trip to Switzerland highlights the logistical challenges associated with such high-level negotiations. Meanwhile, tensions persist in other regions, particularly in Lebanon, where fighting continues despite the broader ceasefire efforts. The situation underscores the multifaceted nature of the conflict and the ongoing challenges in achieving lasting peace across the entire region.