Daily vessel transits through the Strait of Hormuz remain below 60% of pre-conflict levels, yet 120 million barrels of crude are already stranded on 162 laden tankers—and that figure excludes 'dark ships' that have turned off their AIS transponders. Despite a 60-day US-Iran truce, shipping recovery remains elusive: war risk insurance premiums are 10 times pre-conflict levels, reaching $2 million per VLCC transit.
The True Congestion: 162 Tankers and Hidden 'Dark Ships'
As of June 23, industry data shows 162 laden crude tankers stranded in and around the Strait of Hormuz, carrying approximately 120 million barrels of crude and refined products. This count excludes numerous Iran-linked tankers and smaller product carriers that have deliberately disabled their AIS signals to avoid tracking, meaning the actual number of stranded vessels and accumulated oil is significantly higher.
Compared to pre-conflict normal traffic, daily vessel transits through the strait are still less than 60% of previous levels. Shipowners are adopting a cautious, exploratory approach rather than mass transit. They are waiting for further confirmation of waterway safety while assessing changes in insurance, demurrage, and diversion costs, creating a gridlock where vessels 'can go but dare not, or queue to go.'
This structural congestion cannot quickly absorb months of accumulated capacity. For buyers, it means crude supply will release much slower than market expectations, requiring flexible inventory strategies.
Oil Prices Plunge Nearly 16%, but Risk Premium Could Return
Markets priced in expectations of strait reopening and supply recovery, pushing both crude benchmarks lower on June 23: WTI closed at $73.21/barrel and Brent at $76.85/barrel, each down about 1% on the day. Over the entire month of June, both futures fell nearly 16%, rapidly eroding the geopolitical risk premium built up since the conflict began.
However, multiple analysts caution that the current price correction is more a short-term sentiment release than a fundamental reversal. The 60-day truce is inherently fragile, with deep disagreements unresolved, and the situation could deteriorate at any moment.
From a pricing logic perspective, the recent decline has already priced in the short-term benefit of strait reopening. If any incident—such as an attack on a vessel, channel control, or diplomatic escalation—occurs, the flow of accumulated crude would be interrupted again, risk premiums would quickly re-emerge, and oil prices could rebound. Refineries and traders should not use short-term price drops to judge medium-to-long-term procurement costs.
War Risk Premiums: The Core Barrier to Shipping Recovery
The surge in insurance costs due to geopolitical conflict is the key obstacle preventing shipowners from fully returning to the Hormuz route. Current war risk insurance rates in the strait, while down from their peak, remain at about 1% of vessel value—10 times the pre-conflict rate of 0.1%.
For a typical very large crude carrier (VLCC), a single transit through the Strait of Hormuz carries a war risk premium of $2 million. This huge expense severely erodes shipping profits. Faced with multiple cost pressures, shipowners are adopting conservative strategies: some smaller operators are diverting around the Cape of Good Hope, increasing voyage length and fuel/labor costs; major players are only sending a few vessels on trial runs, unwilling to commit large capacity to the Persian Gulf.
As long as war risk premiums fail to return to normal levels, strait shipping cannot recover to pre-conflict efficiency, and global crude transport turnover will remain impaired. For the textile and chemical fiber industry reliant on Middle Eastern crude, this means raw material cost volatility will persist.