Unexpectedly for investors, shipping activity through the critical Strait of Hormuz has picked up in recent days, even as military hostilities between the United States and Iran persist in the Middle East. The U.S. has stated its navy escorted some large oil tankers through the waterway.
Early Thursday, the "Al Areesh" vessel publicly departed the Persian Gulf, loaded with liquefied natural gas from Qatar, marking the country's first export cargo in three weeks. Meanwhile, the LPG carrier "CYH Yongchun" appeared to have transited the strait with its transponder turned off, according to vessel tracking data. Market intelligence firm Kpler reported that 14 commodity vessels passed through the Strait of Hormuz in both directions on Wednesday, an increase from single-digit levels the previous week. These figures may still be revised as new information emerges. Additionally, a crude oil supertanker has been provisionally booked at a day rate of nearly $500,000, scheduled to load cargo at an unnamed Persian Gulf port next week, potentially for shipment to China.
Where to begin
Ship owners and global commodity traders are closely monitoring vessel movements through the Strait of Hormuz and the Red Sea's Bab el-Mandeb strait for signs of how ships are adapting to the shifting security environment. Shipping flows through these waterways have fluctuated with waves of U.S.-Iran geopolitical attacks in the Middle East, including frequent strikes on tankers. The fundamental cause of the latest escalation in the U.S.-Iran conflict is that a previous brief ceasefire failed to resolve the core dispute over control of and free navigation rights through the Strait of Hormuz.
A preliminary understanding on June 18 temporarily spurred a recovery in shipping. However, the U.S. then demanded Iran stop attacking vessels, fully open the waterway, and refrain from imposing transit fees. Iran insisted on its right to control the strait's security and passage order. In July, the U.S. launched a series of airstrikes on Iran's southern coastal, missile, and drone facilities to forcibly restore the waterway's openness. Iran retaliated by expanding its targets from maritime shipping to include Qatar, the UAE, Kuwait, and U.S. forces in Jordan.
The direct trigger for the latest round of escalation was an Iranian missile attack on U.S. forces in Jordan, followed by a U.S. operation lasting about two hours that struck dozens of Iranian Revolutionary Guard command and drone facilities. Concurrent U.S. and Saudi strikes on Iranian-backed groups in Iraq, along with Houthi attacks on Saudi energy facilities, transformed the conflict from a bilateral U.S.-Iran confrontation into a multi-front energy war spanning the Gulf, Iraq, the Red Sea, and the Eastern Mediterranean.
After the U.S. intensified its strikes on Iran in mid-July, traffic through the Strait of Hormuz declined sharply. Tehran subsequently launched retaliatory attacks on military bases or ports of U.S. allies, including Kuwait. Hostilities resumed this week following a brief ceasefire. U.S. Energy Secretary Chris Wright stated that oil continues to flow with the support of the U.S. military. "We are using the U.S. military to escort oil and natural gas out of the Strait of Hormuz," he said in an interview, adding that an average of about 6.5 million barrels of oil per day had moved through the vital strait from the Persian Gulf over the past week. "We are restoring the region's supply of oil and refined products to global markets."
In the Red Sea, some tankers have been spotted entering the Gulf of Aden, indicating an intention to dock at Saudi Arabia's Yanbu port, despite the continued threat of military fire from Iran-backed Houthi forces. Some Asian buyers appear to be lifting cargoes at Egypt's Mediterranean port of Sidi Kerir, a port Saudi Arabia has historically used to export some of its crude.
Other key developments in Middle East shipping
Strait of Hormuz, Persian Gulf, Gulf of Oman: A Norwegian-flagged product tanker appears ready to depart. Two Iranian-affiliated Suezmax tankers, "Chloe" and "Kariz," have entered the strait and are currently anchored off Iran's Bandar Abbas port, awaiting further action. The Very Large Crude Carrier (VLCC) "Jamaica Prosperity" has been provisionally chartered by the shipping arm of an Asian-based charterer, scheduled to load a Persian Gulf cargo on August 3 at a rate of Worldscale 465 points, equivalent to a day rate of nearly $500,000.
Southern Red Sea: Kpler data shows 21 commodity vessels transited the Bab el-Mandeb strait in both directions on Wednesday, down from 38 the previous day. Only Russian crude oil, totaling approximately 3.5 million barrels, was shipped through this chokepoint, though some vessels may have passed with transponders switched off. The South Korean-controlled VLCC "V Glory" was recently seen approaching the Gulf of Aden before turning off its positioning signal. The Saudi-flagged "Samha" was observed taking the same action on Thursday. On Wednesday, some vessels were provisionally booked for August loading at Yanbu, with an option to transit the Bab el-Mandeb strait en route to South Korea.
Northern Red Sea: Late Wednesday, two LNG carriers were attacked near Egypt's Damietta port, close to the entrance of the Suez Canal. No group has claimed responsibility. The Japanese-flagged VLCC "Takamatsu Maru" has become the latest vessel to alter course, heading for Sidi Kerir on Egypt's Mediterranean coast. The ship, which originated from the U.S., is currently in the southeastern Atlantic Ocean. The vessels "Bidbid" and "VL Prosperity" have arrived at Sidi Kerir and are loading cargo, with earlier reports indicating their destinations were in Asia. Three VLCCs that departed Yanbu—"Olympic Luck," "DHT Gazelle," and "DHT Mustang"—are currently anchored off Sidi Kerir with no clear destination.
Why just 10 ASX 200 shares?
Overall, the resumption of energy shipping through the Strait of Hormuz under military escort is very limited. The first visible LNG carrier from Qatar in three weeks departed the strait, and commodity vessel traffic has recovered from single-digit levels. The U.S. reports an average of about 6.5 million barrels of oil per day moving out of the Persian Gulf with military support. However, before the conflict, the Strait of Hormuz carried approximately 20.9 million barrels per day of oil and liquid fuels, representing about 20% of global consumption. Therefore, current flow levels only prove the strait is not completely blockaded, not that supply chains have normalized.
Switched-off transponders, tanker day rates approaching $500,000, vessel diversions in the Red Sea, and soaring insurance costs mean the risk premium has spread from spot supply shortages to the shipping, insurance, refining, and inventory systems. The international crude benchmark, Brent, surged back towards the $100 super-major level after the latest round of geopolitical escalation, at one point spiking nearly 10% intraday. This highlights how commodity market traders are pricing between scenarios of "limited resumption of shipping" and "further escalation of war."
For the Federal Reserve, this pattern of very limited resumption means monetary policy will shift from assessing a one-off energy shock to preventing a second-round pass-through to energy, transportation, goods prices, and wages. On July 29, the Fed voted 9-3 to hold the federal funds rate at 3.50%–3.75%, with three members advocating an immediate 25-basis-point rate hike, indicating a clear increase in hawkish sentiment within the committee. As long as crude oil remains elevated, shipping costs continue to pass through, and core inflation stays sticky, a September rate hike will remain the baseline risk, with the window for rate cuts effectively closed. Only if Hormuz shipping continues to improve and Brent stabilizes back into its pre-conflict range will the Fed be able to continue pausing.
The European Central Bank faces stronger constraints due to the Eurozone's higher dependence on imported energy. With June headline inflation still at 2.8%, energy inflation at 8.5%, and wage growth expected to rebound to 2.7% by early 2027, the threshold for an "insurance-style" rate hike in September or October is lowering. The Bank of England is also more likely to maintain rates at 3.75% for a prolonged period, while rate-cutting cycles in energy-importing emerging economies will be delayed.