The brief calm in the Strait of Hormuz has not allowed the global textile and chemical fiber industry to relax. On June 23, WTI crude closed at $73.21 per barrel and Brent at $76.85, a drop of about 1% for the day and nearly 16% for the month of June. While the rapid decline in geopolitical risk premiums appears to relieve pressure on chemical fiber raw material costs, the real state of the shipping market is far from pre-conflict levels.
Ceasefire in Place, But the Strait Remains Congested
After the US-Iran 60-day temporary ceasefire agreement, ship traffic in the Strait of Hormuz gradually recovered, but congestion has not been substantially resolved. As of June 23, industry data shows that 162 laden crude oil tankers with traceable AIS signals remain stranded in the strait and surrounding waters, carrying approximately 120 million barrels of crude and refined products. This figure does not include 'dark ships' that have voluntarily turned off positioning signals—many Iran-linked tankers and small-to-medium product tankers are choosing to sail in stealth mode, meaning the actual number of stranded vessels and trapped oil is higher than reported.
Compared to pre-conflict normal shipping levels, the current daily number of transiting vessels in the strait is still less than 60% of the pre-war level. Shipowners are adopting a cautious, probing approach rather than large-scale concentrated transits. On one hand, they are waiting for further confirmation of the strait's safety environment; on the other, they are assessing comprehensive cost changes including insurance, demurrage, and diversion costs. This has created a deadlock where 'ships can go but dare not, and those that want to go must queue.' In the short term, the accumulated cargo inventory from months of disruption will not be quickly digested.
War Risk Insurance: The Biggest Hurdle to Shipping Recovery
Even with the easing of tensions, war risk insurance premiums remain far above pre-conflict levels. Current war risk premiums for the strait, though down from their peak, still hover around 1% of hull value, compared to the pre-conflict rate of 0.1%—a tenfold increase in cost. For a typical VLCC supertanker, a single transit of the Strait of Hormuz now carries a war risk premium of up to $2 million, a huge expense that significantly erodes shipping company profits.
Shipowners are adopting conservative operational strategies: some small-to-medium operators choose to bypass the strait via the Cape of Good Hope, extending voyage distances and increasing fuel and labor costs; major shipping companies are only deploying a few vessels for trial transits, unwilling to commit large-scale 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 oil transportation turnover will continue to suffer.
Oil Price Correction: Short-Term Sentiment, Not a Fundamental Reversal
Markets have priced in expectations of strait traffic restoration and oil supply recovery, driving oil prices down rapidly. However, multiple analysts have clearly warned that the current correction is more about short-term sentiment release. Bloomberg Intelligence analyst Lee Klaskow points out that the 60-day temporary ceasefire agreement has very poor stability, as fundamental differences among Middle Eastern parties remain unresolved, and the situation could deteriorate at any time.
From a pricing logic perspective, the recent decline in oil markets has already exhausted the positive impact of short-term transit recovery. Should the strait face new incidents such as attacks on vessels, channel control measures, or escalation of diplomatic conflicts, the export of accumulated crude oil would be interrupted again, risk premiums would quickly re-emerge, and oil prices could stage a phased rebound. For the textile and chemical fiber industry chain, this means raw material costs for PTA and polyester could again fluctuate violently.
Transmission and Response for the Textile & Chemical Fiber Chain
Crude oil price fluctuations directly affect the costs of naphtha, PX, PTA, and other chemical fiber raw materials. While the current short-term decline in oil prices has eased some cost pressure, the high uncertainty of geopolitical risk means that refineries and traders should not judge long-term procurement costs solely based on short-term price drops. Textile companies should be wary: if the strait situation tightens again, raw material prices could rebound quickly, disrupting production plans.
Furthermore, impaired shipping turnover efficiency will also affect the pace of global goods trade. Even if strait traffic picks up, cautious shipowner operations and high war risk premiums will continue to push up overall logistics costs and extend delivery cycles. This poses ongoing challenges for weaving companies that rely on imported chemical fiber raw materials, as well as traders exporting finished fabrics.
Practical Recommendations
For Buyers - Avoid large-scale stockpiling based on short-term oil price drops; keep raw material inventory cycles within 30 days to hedge against price rebound risks from sudden geopolitical changes. - Monitor changes in war risk premiums; if rates fall below 0.5%, consider increasing forward orders to lock in current lower costs. - Negotiate price adjustment clauses with suppliers, agreeing to renegotiate prices when raw material cost fluctuations exceed 5%, to share risk.
For Foreign Trade Companies - Maintain close communication with freight forwarders and prioritize routes via the Cape of Good Hope; though voyage times increase by 7-10 days, this avoids the risk of strait transit suspension. - Clearly specify in contracts who bears additional costs such as war risk premiums and demurrage charges, to prevent profit erosion from unforeseen expenses. - Use financial instruments (e.g., crude oil futures hedging) to lock in raw material costs for the next 3-6 months, hedging against geopolitical premium volatility.
The 60-day ceasefire in the Strait of Hormuz is more like a brief respite than a signal of long-term stability. Practitioners in the textile and chemical fiber chain must use this window to prepare for the worst.