“Traffic through Hormuz reduced by approximately 95 percent [during this conflict]. As a result, prices rose, and not only for crude oil, but also for refined products such as jet fuel, diesel and gas oil,” says Carsten Ladekjær, CEO of Glander International Bunkering, which specializes in supplying fuels and lubricants to the global shipping industry.
Its impact has been uneven across sectors. Middle Eastern countries that rely heavily on energy—especially Asia—have been hardest hit. According to Ladecjour, India imports about 55 percent of its energy from the region, China about 50 percent, Japan 93 percent, South Korea 67 percent and Singapore 70 percent.
Although the ceasefire signals a possible reopening, key details remain unclear. “Even with a ceasefire, reopening will not be immediate,” says Ledecjour. “There is a backlog, with ships waiting to get out, and probably a controlled process as to who gets out first. Iran still appears to be managing that.”
Energy markets reacted quickly. Brent crude fell from $110 at the start of the week to around $94 – a drop of about 15 percent.
“Refined products like diesel and jet fuel have declined even more because markets are forward-looking – their pricing is based on expectations,” says Arne Lohman Rasmussen, chief analyst and head of research at Global Risk Management. “But we’re still well above pre-war levels, which were around $60 to $70.”
A system under backlog
About 1,000 ships remain in the gulf, including hundreds of tankers waiting for passage.
At the time of this writing, more than 800 cargo ships and tankers are stuck inside the Persian Gulf, while more than 1,000 additional ships wait on both sides of the Strait of Hormuz.
Under normal circumstances, about 150 ships pass through the strait every day. Experts say it will take time to clear the backlog, as ships will have to be sorted, refueled and repositioned.
“It’s a logistical nightmare,” says Lohmann Rasmussen. “We don’t yet know what the current capacity will be, especially from a safety point of view.” “This is not something that can be solved overnight. There are logistical issues, security issues and even communication challenges.”
Although the market has already seen a recovery, it does not mean that prices at the pump or in storage will fall immediately.
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