- Reopening the Strait of Hormuz remains difficult despite US-Iran talks in Islamabad ending without deal
- About 150 tankers pass daily normally; only 150 total passed through in March amid blockade
- Experts say shipping lines must re-enter Gulf to normalize trade, not just clear waiting tankers
Reopening the strategically crucial Strait of Hormuz is proving to be difficult for the Donald Trump administration, with talks in Islamabad ending without an agreement between Tehran and Washington over the weekend. But even if the vital waterway fully reopens, it will not be enough to ease the global oil crisis stemming from the blockade.
According to experts, even if all tankers already struck at Hormuz are allowed passage, things won't normalise until shipping lines start re-entering the Persian Gulf.
Hormuz Blockade
Hormuz-- through which a fifth of global crude oil and liquefied natural gas (LNG) passes --has emerged as Iran's most effective weapon in its war with the United States and Israel. Iran has held the global oil passage under its chokehold since the war started on February 28, driving up oil prices and fueling fears of a rise in inflation.
Normally, about 150 vessels pass through Hormuz daily. In March, just around 150 tankers transited through the waterway in the whole month, according to data from S&P Global Market Intelligence.
There are about 400 loaded oil tankers in the Gulf waiting to get out, but just about 100 empty tankers eager to get in, according to Matt Smith of trade analytics firm Kpler.
Why Reopening Hormuz Is Not Enough
According to experts, from tanker owners to their insurers, almost nobody is confident enough to pass through the strait. They won't let their ships re-enter the Gulf unless they're sure vessels won't be caught there for weeks or longer, they said.
"A two-week ceasefire and a ceasefire that's fragile -- I don't think that would give the confidence (to ship operators) that is needed," Lale Akoner, a global market analyst at eToro, told CNN.
She noted that without new ships entering the Gulf to pick up the next loads of oil, fertilizer, or other much-needed cargo, the benefits of hundreds of fully loaded ships sailing out of the strait would be short-lived.
This could prolong the shortages, and elevated prices for oil and other goods could continue to haunt the oil supply for months.
"(Almost) nobody is confident enough to pass through the strait," Smith told CNN.
According to him, even if the strait were to open today, it would still likely take until July for oil flows to get back to normal.
Moreover, without new ships coming through the strait and into the Gulf, production of various goods made there-- crude oil, gasoline and other refined fuels, and fertiliser--will remain on hold, Smith noted.
The oil production in the Gulf has been reduced during the past six weeks due to various factors, including the damage to infrastructure in the US and Iranian strikes and because there was no place to put those goods.
The oil producers around the Gulf "are used to just putting (oil) on a tanker, and it immediately going out," Smith said.
"They're going to need time to increase production but also have the tankers in place there to be able to load that crude."
Trump's Strategy
Despite Donald Trump's claims that reopening the waterway is not his responsibility, the US leader is under pressure to resolve the issue before the continued closure of the strait becomes a greater crisis for the US and the global economy. In a pressure tactic against Iran, Trump has announced that the US military would begin a blockade of all maritime traffic entering and exiting Iranian ports and coastal areas on Monday--a move that could jeopardise a fragile two-week ceasefire.
If Trump's strategy succeeds, he will eliminate Iran's greatest point of leverage in negotiations and clear the Strait again for global trade, potentially lowering oil prices in the long run.
