Hormuz Ceasefire Fails to Move 800 Ships Amid Iran Toll Dispute

A two-week ceasefire in the Persian Gulf announced April 7 has stalled, as over 800 commercial ships refuse to transit the Strait of Hormuz amid stark disagreements between the US and Iran over passage terms, particularly a new Iranian proposal to levy transit tolls. The standoff, which began after Iran’s closure of the key waterway following a US-Israeli bombing campaign on Feb. 28, keeps roughly a fifth of the world’s oil supply off the market.

"The blockade is increasingly being seen by Iran as a strategic goal with potential economic benefits," Natasha Kaneva, a commodity strategist at JPMorgan, wrote in a report, suggesting Iran has limited motivation to fully reopen the strait without a broader agreement.

The effective blockade has trapped 426 crude and product oil tankers, 34 liquefied petroleum gas carriers, and 19 liquefied natural gas ships, according to Kpler data. The disruption has sent jet fuel prices surging 95% in the US since the war began, according to the Argus U.S. Jet Fuel Index, forcing airlines like United to prune flights. The situation is also dire for the approximately 20,000 seafarers stranded on the vessels.

The impasse hinges on Iran's demand for transit fees to fund its reconstruction, a stark departure from the long-standing international convention of free passage through the waterway. While the US insists on a "complete, immediate, and safe opening," Iran’s Supreme National Security Council stated any passage would be coordinated and subject to "technical limitations." An unnamed regional official cited by CCTV News suggested the deal includes a toll, potentially around $2 million per vessel.

The fallout is rippling globally. European airports are restricting refueling, leading to flight cancellations by carriers like Ryanair. In Bangladesh, severe shortages have led to robberies at gas stations. Australia and South Korea have launched national energy conservation campaigns, urging citizens to use public transport, while the Philippines and other Southeast Asian nations have encouraged work-from-home policies to save fuel.

For shipping to resume, owners and insurers require more than just a temporary pause in hostilities. "You can't restart global shipping flows in 24 hours," said Jennifer Parker, an adjunct professor at the University of Western Australia’s Defence and Security Institute. A potential catalyst could be the deployment of the US Navy to escort commercial vessels, a move now theoretically possible under the ceasefire. To that end, the US has doubled its available reinsurance guarantees to $40 billion for ships willing to transit, but the risk of the ceasefire collapsing keeps owners anchored.

This article is for informational purposes only and does not constitute investment advice.