Hormuz Remains Iran's Leverage as Shipping Traffic Recovers Only Partly and Freight Costs Surge

In the week of October 29 to November 4, the UK Maritime Trade Operations Center counted 325 reported transits through the Strait of Hormuz. The week before, it had counted 277. That is a rise of about 17%, and it is the kind of figure that sounds like recovery until it is set beside the pre-war baseline: traffic is still roughly 65% below it, according to the UKMTO's weekly report, released on November 6.

The strait remains dangerous. Since the Iran war began, attacks on commercial ships there have put crews at risk of death and injury. The reporting names no specific casualties. Shipping companies are left with a choice between attempting the passage anyway or holding cargoes back and absorbing higher costs. Merchant vessels are still going through, but how long that can last depends partly on how long Iran can keep up its attacks, and partly on whether the United States can protect shipping and pay for doing so.

Ali Mohammadi, an expert on Iranian affairs based in France, argues that Iran's geography and the equipment it uses let it keep attacking ships. He sees Tehran's real constraint as economic rather than military, since continuing the war weighs heavily on its economy. There is also a gap in what is known: reliable information about Iran's weapons stocks, and its ability to replenish them, is lacking, so how long it can sustain the attacks is unclear. Sporadic attacks are also not the same as a full closure of the strait. Even if a complete closure were possible, Mohammadi told DW, it would not be sustainable, because it would carry high political costs and Iran cannot indefinitely cut off its own allies' access. By threatening shipping, he said, Iran can raise the price of confrontation and look for leverage in negotiations, though that guarantees neither success nor concessions.

Vessel counts, though, tell only part of the energy story. Dalga Khatinoglu, an expert on Iran's energy and macroeconomics, pointed out that cargo volumes and the routes used matter too. For crude oil, Middle Eastern exports across all routes, from the Gulf of Oman and Hormuz to the Red Sea, have largely returned to pre-war levels, he said, and in some weeks of September and October exceeded them. His assessment covers the whole region's exports, not just what passes through Hormuz.

Refined products look different. Before the war the Middle East exported about 6.2 million barrels a day of petroleum products, and Khatinoglu says that figure has roughly halved. Liquefied natural gas has also suffered: as of September, exports from Qatar and the UAE were about 10% below pre-war levels. There has been some improvement, he said, but they remain severely disrupted.

Then there is the price of getting cargo out. Citing recent OPEC figures, Khatinoglu said the average freight rate for a large tanker carrying crude from the Middle East to East Asia has risen about twelvefold, from $3.18 (€2.84) a barrel at the start of the year to $37.13 at the end of October. Shipping and insurance costs have stayed very high even as oil exports approach pre-war levels, which means Asian importers pay far more even when crude is available.

Both experts doubt that military escort alone can fix this. Mohammadi said reducing costs and restoring commercial confidence requires more than a US military presence, and that the only solution is an end to the war with a lasting agreement that brings lasting security. Khatinoglu agreed that oil prices cannot be expected to return to pre-war levels simply by relying on US protection for ships in the strait. What to watch is whether the weekly transit counts keep climbing, and whether freight rates follow them down.