Iran Establishes 'Safe Corridor' in Strait of Hormuz as Shipping Halts
Threats to maritime security have effectively shut down the Strait of Hormuz for four weeks since the onset of the US-Israel war on Iran, disrupting global oil and gas supplies and causing energy prices to surge dramatically. In typical times, this narrow channel facilitates the transit of approximately one-fifth of the world's oil and gas via tankers, alongside a third of global fertilisers crucial for half of global food production, transported in dry bulk vessels.
Drastic Decline in Maritime Traffic
Prior to the conflict, an average of 138 ships navigated the waterway daily, as reported by the Joint Maritime Information Center. However, Lloyd's List Intelligence estimates that only about this number made the journey throughout the entire month of March, with 100 vessels exiting the Gulf and 40 entering. This stark reduction follows over 20 ship attacks in the region, including near-misses and incidents causing minor damage, resulting in several crew fatalities.
The first major incident involved the Palau-flagged oil tanker Skylight, struck off Oman's coast early in the month, leading to the deaths of its Indian captain and a crew member. Although no vessels have been damaged since March 22, analysts predict it could take months for normal shipping patterns to resume post-conflict, contributing to widespread uncertainty.
Vessels Stranded and Alternative Routes Emerge
Amid this turmoil, an estimated 1,000 vessels, primarily gas and oil tankers along with container ships, have chosen to remain anchored or in port, reluctant to risk movement. The International Maritime Organization has raised alarms about 20,000 seafarers stranded in the Gulf under stressful conditions with dwindling supplies. Despite this, a small number of vessels are attempting crossings, many opting for an alternative route through Iranian waters.
On a recent Tuesday, Tehran informed the IMO and UN that it would allow 'non-hostile vessels'—defined as those not engaged in or supporting aggression against Iran, nor belonging to the US or Israel—to pass through the strait. Iran aims to redirect traffic from the standard commercial lane to a 'safe corridor' within its territorial waters, situated near Larak island and the Iranian coastline.
Iran's Control and Financial Implications
This corridor enables Iranian authorities, including the Islamic Revolutionary Guard Corps, to visually inspect and approve vessels, a mechanism dubbed 'Tehran's tollbooth' by Lloyd's List analysts. It remains unclear if Iran mandates payments for safe passage, but reports indicate at least two vessels paid fees, with one very large crude carrier charged up to $2 million, reportedly in Chinese yuan due to IRGC sanctions by Western governments.
Analysts caution that Iranian approval does not ensure vessel safety, as internal factions within the IRGC could still delay or seize ships despite official clearance. Recent data shows a slight uptick in transits, such as four vessels crossing on March 24 with transmitters on, but many may sail without reporting positions, complicating tracking efforts.
International Response and Insurance Challenges
International efforts are underway to reopen the strait, with over 30 countries, including the UAE, UK, France, Germany, Canada, and Australia, signing a joint statement to safeguard the waterway. Britain has offered to host a security summit to develop a collective plan. Meanwhile, the maritime insurance industry maintains that coverage is available at higher premiums, though low demand reflects concerns over crew and vessel safety rather than insurance availability.
As the situation evolves, the global community watches closely, with the Strait of Hormuz remaining a critical flashpoint in regional and international trade dynamics.
