Market News

Bloomberg) -- A US-Iran deal intended to reopen the Strait of Hormuz within days has been met with caution by shipowners and traders, with almost all saying they would need more details in order to assess whether safe transits are possible after months of false starts.

A vital conduit for global oil and gas, Hormuz has been at the heart of the conflict from the first days of strikes on Iran, and the urgent need to resume traffic has been a vital theme in months of on-off peace discussions. The disruption has upended the global energy trade, all but cutting off some of the world’s top producers and forcing major players to resort to “dark” transits.

News of a long-awaited agreement between the US and Iran and the prospect of ending a double blockade cheered oil futures in early trade on Monday, with Brent down almost 5%. But those ferrying crude and gas around the world are still questioning what exactly a reopening — which US President Donald Trump has said will come on Friday — could mean in practice.

“It’s still early days and there’s a lot of spitballing at this stage,” said Anoop Singh, global head of shipping research at Oil Brokerage Ltd. “We’re not seeing any big shipowners changing their stance at this point. They’re staying put for now.”

Major Japanese shipping companies, among the first ones to respond to the deal, cautioned that safe navigation would only be possible after details are finalized. Mitsui OSK Lines said close coordination with governments and insurance firms would be essential before it could send ships through the strait again, while Nippon Yusen KK said a normalization of traffic hinges on what’s being laid out in the agreement.

There was little activity in the strait in the hours after the news, with the exception of one liquefied natural gas tanker, Disha, testing the waters as it heads into the eastern arm of Hormuz, toward the Gulf of Oman.

“Shipowners are on a risk spectrum — the Japanese, Koreans and Chinese are less open to high risk, while the Greeks have a different appetite — so we may see some people gearing up,” Singh said. “But by and large the rest of the market is still seeking more details and assurance before proceeding.”

Traffic through the strait has slowed to a trickle since US and Israeli strikes began at the end of February, sinking to a fraction of a pre-war average of about 135 transits daily. Some oil and gas producers have found workarounds to send tankers through, at times with support from the US or through government-to-government negotiations, but total crossings remain extremely subdued.