Hormuz Reopens, But Iran Now Controls Every Ship

Hormuz Reopens, But Iran Now Controls Every Ship

Iran had previously closed the Strait after fighting broke out with the US, and today it announced a partial reopening, but entirely on its own terms.

Under the new arrangement, no hostile vessels can pass unless they first coordinate directly with Iranian authorities, effectively giving Tehran the power to inspect and approve every ship before it moves through the waterway.

Some vessels have already started transiting again through routes that run via Iranian territorial waters, but the scale of the disruption remains very large. Up to 3,200 vessels have been stranded, 22 ships have been struck, and some operators are reportedly paying as much as US$2M per transit just to get through safely.

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What does this mean for the war?

This does shift the war dynamic in a more constructive direction. A complete shutdown of the Strait invites intense international pressure and raises the risk of direct military intervention to force it back open. A partial reopening allows Iran to keep control while reducing some of that pressure.

It also suggests Iran is not acting irrationally and can still be negotiated with. The fact that it felt the need to send a letter to IMO members shows it is aware of the international backlash and does not want to be seen as the country responsible for crippling global energy markets.

For us, that is an important signal. It suggests the economic pressure is starting to register, and that may improve the chances of a more fragile but workable de-escalation from here.

How long until the oil supply recovers?

A lot depends on how the war itself resolves. Even if we do get a ceasefire or a meaningful de-escalation, full supply would still likely take two to four months to normalise based on our estimates, because damaged infrastructure would still need to be rebuilt and the logistics chain would need time to recover.

Shipping insurers would need to re-engage, war risk premiums would need to fall, operators would need to move vessels back onto normal routes, and the backlog of roughly 3,200 stranded ships would need to clear. Oil prices would likely ease more quickly on expectations of recovery, but the physical supply response would lag behind.

So we are not fully out of the danger zone, but it could be the start of a de-escalation. The problem is that if the conflict continues to drag on without a full resolution, the world remains in sustained supply shock territory.

Around 20% of global oil normally moves through Hormuz, and that volume cannot simply be rerouted elsewhere. Saudi Arabia, the UAE, Kuwait, and Iraq have only limited pipeline capacity that bypasses the Strait. Saudi Arabia’s East-West pipeline can handle roughly 5 million barrels per day, which is well below the 17 million to 20 million barrels per day that previously moved through Hormuz. That gap is not something the market can fill easily.