Shipowners weigh up risk of dark Hormuz transits
A SMALL minority of shipowners have already indicated to charterers that they would risk transiting the Strait of Hormuz despite the escalating conflict, Lloyd’s List understands.
Transits through the strait have collapsed 81% since the US and Israel launched coordinated strikes on Iran, however senior trading sources have confirmed that some, largely Greek, owners have already started discussing a return to the trade.
The highly speculative discussions have so far not resulted in any fixtures, however the owners indicated they would be willing to transit at night with AIS turned off.
The owners reportedly appeared confident that insurance could be found for the right trade, Lloyd’s List was told.
While transits through the Strait of Hormuz are physically possible, the strait is de facto closed for most ships, either due to self-imposed safety concerns or lack of war risk insurance.
On Monday (March 2), leading ship insurers from across the International Group of P&I Clubs, including Gard, Skuld, NorthStandard, London P&I Club and American Club, all issued notices to cancel war risk coverage for Iranian waters, the Gulf, adjacent areas, and the Strait of Hormuz.
Under the notice period agreed, that will take effect at midnight on Thursday. However, new rates and terms are already being finalised, albeit at significantly increased sums.
Initial estimates over the weekend from Marsh indicated that near-term rate increases for marine hull insurance in the Gulf could range from 25% to 50%, but that was before at least four ships were directly hit in the crossfire.
The cancellation of war risk, prompted by heightened conflict risks and recent tanker incidents, reinforced the suspensions of crude, fuel, and LNG shipments through the strait, with over 150 tankers anchored outside the chokepoint, severely constraining global oil and gas transport.
Around 9% of the mainstream VLCC fleet is currently locked inside the Middle East Gulf.
According to Lloyd’s List Intelligence AIS data, there are 22 laden, non-sanctioned VLCCs north of the Strait of Hormuz, based on the tankers’ reported draughts (excluding VLCCs being used as floating storage, and including partially-laden vessels).
Vortexa data showed loadings of Iran-origin crude approached a post-sanctions era high in February, and it was not immediately clear how many VLCCs laden with Iranian cargoes were currently north of Hormuz. However, satellite imagery on the morning of March 2 showed the anchorages near Iran’s main export terminals in Kharg Island relatively empty compared with imagery taken on Friday.
The market is now carefully watching Chinese and Iranian controlled tankers to see if they will be willing to risk restarting oil transits.
While trading sources confirm that only a very select few shipowners are currently making enquiries about a return to the strait, there is a working assumption amongst brokers that insurance companies are ready to provide additional cover when a deal can be fixed.
Most tanker owners, however, remain sceptical that this will result in anything more than a handful of tankers being traded in the near term.
The prospect of transits being conducted at night with the vessel’s AIS turned off also remains a risk that few owners are currently willing to take.
At least 46 cargo-carrying vessels in the region of the conflict, of over 10,000 dwt, have stopped transmitting AIS since the outbreak of hostilities.
Eleven of the vessels were in the Gulf of Oman, 21 were inside the Middle East Gulf and a further 11 were berthed at port inside the Gulf.
The decision to switch off AIS does not indicate a willingness to transit, however.
Tanker market participants contacted by Lloyd’s List suggest that it is only a very small minority of owners currently willing to even consider moving through the danger zone.
“For the time being there is no insurance for going through the Strait of Hormuz and nobody is going to do that, the chances of being hit are too high. You would have to be crazy to do it, especially without insurance,” said Harry Vafias, whose family group owns or manages a fleet of about 100 ships spanning tankers, bulkers and liquefied petroleum gas carriers.
According to Vafias the eruption of war in the Middle East will prove “extremely positive for energy-carrying ships and extremely negative for everyone else”.
Evidence of a strong bump in earnings for crude oil tankers was already being seen with suezmaxes breaking $200,000 a day, he said.
Very large crude carriers “will be fixing at $500,000 a day — it’s coming very soon,” he predicted.
In the meantime shipowners will almost all route vessels the longer way around the Cape, in Vafias’ opinion, adding to the shortage of supply.
“In the VLCC sector especially, the supply is already squeezed,” Vafias said, citing the approximately 20% of the VLCC market that has been seized by Sinokor and Gianluigi Aponte.
“It’s an extreme nightmare for the charterers.”
“This is what it looks like right now, but no-one knows what is going to happen in a week’s time.”
Content Original Link:
" target="_blank">
