Iran-Israel ceasefire eases oil market tensions but Hormuz tanker traffic still under threat

US president Donald Trump’s declaration that Iran and Israel have agreed to a “complete and total” ceasefire has eased pressure on oil markets—and, for now it seems, the threat of a global energy shipping crisis.

Major concerns about rising oil prices and their impact on global inflation escalated after the US hit a number of Iranian nuclear facilities and Iran’s subsequent retaliatory bombing of a US base in Qatar.

The market’s main fear was the potential for Iran to shut down the Strait of Hormuz, the waterway that supports more than 30% of global seaborne oil flows.

Critical energy route

Since 2020, this critical route has been used to transport an average of 14.8 million barrels per day of crude oil and natural gas liquids, 5.5 million barrels per day of petroleum products and 10.8 billion cubic feet per day of LNG.

While there have been reports Iran’s parliament is debating whether to close the strait, analysts believe a full closure is unlikely as it would severely impact Gulf economies – including Iran’s – and disrupt supplies to key trading partners like China.

Nevertheless, some ship operators have already made moves to avoid the critical Strait of Hormuz chokepoint.

Insurance costs surging

According to S&P Global Commodity Insights analyst Fotios Katsoulas, the impact on shipping in the Middle East has seen insurance costs more than double, driving operators away from the region amid uncertainty and security concerns.

S&P has reported that just 19 oil tankers passed through the Strait of Hormuz by 11.12am GMT on June 23, compared with the daily average of 44 between June 16 and 22.

At the same time, freight rates in the Persian Gulf have surged as security risks escalate and vessel availability tightens.

Empty tankers

There are also reports that the number of empty tankers sailing to Middle Eastern oil producers has fallen, as shipowners steer away from the Strait of Hormuz.

Initial data shows that 699 unladen crude and product tankers were destined for the eight countries with oil export facilities as of June 22, down from a daily average of 741 between June 8 and 14—the lowest seasonally adjusted number since 2021.

The world now waits to see what the next stage of this crisis will be and its impact on oil supplies and prices.