Strait of Hormuz back in limbo: Iran declares closure, the data disagrees, the market waits

A week from the deal, deadlock again

The strait has been largely blocked since late February, when the United States and Israel went to war with Iran. The breakthrough came only last week, when Washington and Tehran signed a 14-point memorandum of understanding (MOU) under which they agreed to reopen Hormuz toll-free for at least 60 days and to end hostilities, including in Lebanon. Traffic began to recover. On Thursday around 20 tankers crossed the strait, the highest figure since 2 June, and about 25 vessels of all classes in total, with most using the route designated by Iran rather than the one defined by the IMO.

The rebound proved short-lived. On Saturday Iran again declared the strait closed, citing ceasefire violations after Israeli strikes in southern Lebanon. The US side denied it, maintaining that the waterway remained open and that Iran does not control the strait.

The data diverges

The picture is murky, because some ships switch off their AIS transponders. According to intelligence firm Windward, 12 vessels crossed on Sunday, down from more than 21 the day before, with five of eight inbound ships sailing with their AIS off; analysts judged that the traffic profile resembled the late stage of the blockade rather than a functioning open strait. Lloyd's List, by contrast, recorded that commercial traffic continued through the weekend, with at least 15 Iran-flagged tankers outbound from the Gulf of Oman with AIS active on Saturday night. Some tracking services went further, reporting no outbound traffic for several dozen hours. For an editor, the lesson is clear: the numbers must be handled carefully and attributed to their source.

What it means for the market

The exposure is enormous. Before the war, around a quarter of the world's seaborne oil trade and about a fifth of global LNG passed through Hormuz. Hence the market's nerves: after signals of de-escalation from Switzerland, oil prices fell around 4% on Monday. Risk costs are rising too. Even before the war broke out, war-risk insurance premiums for the strait jumped from 0.125% to 0.2–0.4% of a vessel's value per transit, which for the largest tankers means an increase of around a quarter of a million dollars. The fertiliser market is under pressure as well: global shipments are down 11% year on year, and prices in the first half of the year could be 15–20% higher if the crisis persists. Some cargoes have been rerouted, with traffic through the Panama Canal rising, while the safety of navigation carries the added risk of mines, which Iran has suggested it may have laid.

Diplomacy in train

Talks are running in parallel. On Sunday US Vice President JD Vance arrived in Switzerland for discussions with an Iranian delegation intended to build on last week's agreement. Tehran maintains that it has secured waivers for its oil and petrochemical exports, the lifting of the blockade on its ports, and the release of some frozen assets. President Donald Trump has threatened further strikes if Iran does not rein in its allies in Lebanon.

What comes next

The coming days will decide whether the weekend's deadlock was an episode or the prelude to a further phase of the crisis. Even if the agreement holds, uncertainty is built into the route: after the 60-day toll-free period, Iran is to hold talks with Oman and the Gulf states on how the strait will be administered, leaving the door open to transit tolls in future. For shipowners, insurers and gas buyers in Europe, Hormuz therefore remains a variable that cannot yet be closed off.