US President Donald Trump on Sunday hailed a framework agreement between the United States and Iran aimed at ending hostilities in the Gulf that have paralyzed commercial shipping in the Strait of Hormuz for more than three months.
The agreement, to be signed on Friday in Switzerland, reopens the strait to shipping without tolls, lifts the US naval blockade of Iranian ports and allows Tehran to resume oil exports under limited sanctions relief.
The framework extends the current ceasefire for at least 60 days while launching comprehensive talks on Iran’s nuclear program.
Yet, unlike reopening a highway after a car accident, restoring pre-war oil, gas and container traffic through this critical chokepoint faces significant obstacles.
Greek maritime risk management agency MARISKS warned in a research note on Monday that the framework agreement should be seen as “the beginning of a process of de-escalation rather than an immediate resumption of normal trading conditions.”
When can Gulf shipping safely resume?
Assuming both U.S. and Iranian attacks have ended once and for all, Iran must first locate and clear naval mines deployed during the conflict to make the waterway navigable once again.
Most can be located fairly quickly using minesweepers, underwater drones and sonar. But maritime experts say some mines have been washed away or become difficult to find.
Independent observers would then be required to verify that the waterway is safe for shipping.
Reuters news agency quoted maritime security sources as saying on Monday that the process could take 40 to 50 days.
Jakob Larsen, chief safety and security officer at shipping association BIMCO, told Reuters the Hormuz transit would be “very risky” right now and called for a “mine-free route”.
War-risk insurance still a major hurdle
Even when the mines are cleared, shipping companies will still seek much lower war-risk insurance costs for the Hormuz transit before confidence is restored.
According to one report, at present, the premium is very high, at 1% to 4% of the value per transit ship, while the pre-war rate is less than 0.1%. the new York Times.
For a typical $200-million (€172-million) tanker, this added between $2 million and $8 million per transit, compared with less than $200,000 before the war.
Shipping data and analytics company Lloyd’s List on Monday cited an unnamed Singapore-based insurance underwriter who described premiums as “rising quickly, slowing down.”
Anup Singh, global head of shipping research at Oil Brokerage Ltd, warned that shipowners will weigh the pros and cons based on their risk tolerance.
“The Japanese, Koreans and Chinese are less open to higher risk, while the Greeks have a different appetite – so we may see some gearing up,” Singh told Bloomberg.
When can stranded ships start moving?
Once safe corridors are established in the strait, hundreds of commercial ships and their crews stranded for months in the wider Gulf region can begin to move.
Bloomberg, citing data from commodity intelligence firm Kpler, said 300 fully loaded ships are currently sitting in the gulf, while 250 more are empty and awaiting loading once the strait reopens.
Near the Gulf of Oman, an additional 300 empty tankers are waiting for permission to enter the Gulf.
Keeping staff on those ships could be another hurdle. According to the UN’s International Maritime Organization, about 20,000 sailors are estimated to be on stranded ships.
The UN agency also confirmed that 14 crew members were killed in the attacks, nearly half of them from India, the third-largest provider of sailors after the Philippines and China.
Amid growing reluctance among crew to accept deployment in the Gulf region, India’s Directorate General of Shipping on Sunday ordered employment agencies to restrict deployment to conflict zones.
Damaged energy facilities and return to normal
Meanwhile, Gulf countries can now start accelerating oil and gas production. But this requires safety inspections of energy facilities, repairs to any damaged infrastructure and a phased return of workers and maintenance staff.
A full restart will depend on restoring shipment schedules, securing enough tankers and reassuring international buyers that energy flows are reliable again.
Neil Shearing, group chief economist at UK-based Capital Economics, estimated on Monday that it would take until the end of September for about 80% of energy flows through Hormuz to resume.
Shearing warned that natural gas flows “will be slow to return”, citing damage to Qatar’s Ras Laffan liquefied natural gas facility, where the attacks destroyed about 17% of the country’s export capacity, potentially for several years.
What other regional progress could there be?
The biggest unresolved issue surrounding the US-Iran Framework Agreement is that it is merely a framework for negotiators to find a permanent end to the conflict.
Looking ahead the US is pushing for a permanently toll-free strait, while Iranian officials have talked about a “service fee” with neighboring Oman and maintaining control over the waterway.
With broader issues such as Iran’s nuclear ambitions, sanctions relief and Tehran’s support for groups such as Hezbollah and the Houthis still unresolved, analysts think there is a real risk of more attacks.
Iran, emboldened by its dominance of the Strait of Hormuz, may continue to test limits, while Israeli Prime Minister Benjamin Netanyahu has insisted his country is not bound by the agreement.
He warned that Israel would continue to act in self-defense, raising fears that unilateral attacks could quickly overwhelm the fragile infrastructure.
Edited by: Tim Rooks