Strait of Hormuz reopens but shipping risk keeps costs high

India’s cargo movement through the Strait of Hormuz is beginning to recover after last week’s US-Iran memorandum of understanding (MoU), but freight markets are sending a colder message: the waterway may be open, but it is not yet normal.

The ministry of external affairs said on Tuesday that 11 India-bound vessels had crossed the strait since the 17 June MoU, the clearest official sign so far that cargo flows through the Gulf chokepoint are gradually resuming.

The vessels included three crude oil carriers, four fertilizer ships, two liquefied petroleum gas carriers and two container ships, according to the ministry.

India depends heavily on Gulf energy flows and also imports fertilizer cargoes through the region.

The latest crude-import data show India had already been reshuffling supply before the latest Hormuz disruption.

India’s crude imports rose to 5.27 million barrels per day in May, Reuters reported, with Russia still the largest supplier at about 1.92 million barrels per day.

UAE shipments also rose sharply that month to 942,500 barrels per day, making it India’s second-biggest supplier.

The pattern appeared to shift again in June as Gulf risk rose.

Kpler data cited by Reuters showed India’s Russian crude arrivals were expected to climb to a record 2.55 million barrels per day, nearly half of total imports, while Saudi supplies were forecast to fall from pre-conflict levels. That suggests refiners were leaning more heavily on Russian barrels as a buffer, even though Gulf shipments remained important.

A supertanker has been provisionally booked to carry oil from the Persian Gulf to India at almost nine times the normal benchmark rate, Bloomberg reported on Wednesday, citing shipbrokers.

The vessel will be supplied by South Korea’s Sinokor, one of the tanker owners that has remained active in the Gulf during the conflict. The steep rate shows that ships are moving again through the region, but owners are still charging heavily for the risk.

The rate is the highest so far this year, Bloomberg reported. Details such as loading dates, ports and buyers were still being finalized.

That single booking captures the new state of the Hormuz trade, analysts said, while pointing out that ships are moving again, but owners want to be paid heavily for risk.

The MEA update followed a series of transits by Indian cargoes.

Shipping minister Sarbananda Sonowal said earlier that three Indian-flagged oil tankers, Desh Vaibhav, Desh Vibhor, and Sanmar Herald, had safely crossed Hormuz with more than 860,000 metric tons of oil and 94 Indian crew members.

Four ships carrying urea, di-ammonium phosphate and sulphur also crossed the strait last week and were heading to Indian ports, adding some relief to fertilizer supply planning.

Meanwhile, the market is trying to judge how much of the post-MoU calm is durable. Bloomberg reported that some shipowners have begun repositioning vessels toward the Gulf to take advantage of high freight rates and renewed movement.

Around 65 empty very large crude carriers are able to reach the Gulf of Oman within a week, with Sinokor owning about 25 of them, according to brokers’ estimates cited by the news agency.

Since the agreement, four empty Sinokor very large crude carriers (VLCCs) have sailed into the Persian Gulf, Bloomberg reported, citing transponder signals and shipping data.

Three other supertankers owned by mainstream companies have also entered the region, adding at least 14 million barrels of capacity. An Iranian VLCC has separately moved into the area.

Meanwhile, the government’s immediate priority is safe passage for remaining Indian-flagged and India-bound vessels.

MEA spokesperson Randhir Jaiswal said at a Tuesday, 23 June, media briefing that India had 10 Indian-flagged vessels in the Persian Gulf region, with two more having recently arrived there.