The resurgence of conflict between the US and Iran sharply reduces Hormuz transit volume, cautious shipowners withdraw and drive up transportation costs

Golden Ten Data reported on July 11 that since the resumption of hostilities between the US and Iran this week, transit volumes through the Strait of Hormuz have dropped significantly. According to Kpler data, the number of vessels passing through on Thursday fell to 22 from 30 the previous day. On Tuesday local time, after Iran targeted ships in the Strait (including damage to a Qatari LNG carrier), hostilities between both sides flared up again. Kpler data show that since the mutual attacks on Tuesday, only two LNG ships entered the Strait and one departed. Following the agreement between the US and Iran on June 17 to begin negotiations to end the conflict, transit volumes saw a temporary increase and peaked a few days later, but the ceasefire was subsequently broken. In a client note on Friday, shipping brokerage Braemar LNG stated that shipowners have adopted a cautious approach, withdrawing available capacity from the region “until the geopolitical situation becomes clearer.” This has reduced the number of available vessels and pushed up transportation costs.