Kpler: The market has stopped waiting for full reopening of Strait of Hormuz

August 29 ------ The 60-day window under the US-Iran Islamabad Memorandum of Understanding (MoU) expired on 17 August without a peace agreement, extension or active negotiations, while oil markets have increasingly adapted to restricted and opaque shipping routes through the Strait of Hormuz, according to Kpler.

However, Kpler said the MoU helped clear a large backlog of stranded crude tankers but failed to restore normal traffic through the strategic chokepoint. About 374 million barrels of crude, equivalent to roughly 6.1 million barrels per day, moved out of the Gulf during the 60-day period, compared with about 2.3 million barrels per day during the months affected by the blockade before the agreement.

Tanker backlog falls before rebuilding

The truce initially produced a significant improvement in shipping flows. Floating crude storage fell from about 61 million barrels when the MoU was signed to 16 million barrels within three weeks, as laden tankers were able to leave the Gulf.

However, Kpler noted that the underlying disruption was not resolved. Crude on water in the Middle East Gulf and Gulf of Oman fell from 165 million barrels at the signing of the MoU to 107 million barrels by 7 July, before rising again to about 130 million barrels by 16 August. This remained above the roughly 96 million barrels recorded at the beginning of the war.

Hormuz traffic becomes increasingly opaque

The share of Gulf of Oman exports without confirmed upstream cargo fell to about 5% during the third week of the MoU, when vessels were openly loading and transiting with their Automatic Identification System (AIS) signals visible.

That share subsequently increased, reaching 66% of a shrinking total during the week the MoU expired. The southern Omani corridor, which opened under Joint Maritime Information Center guidance on 20 June, reached 48 crossings in its second week but effectively disappeared by the fourth week after attacks on vessels using the route.

The IMO route also fell to zero, leaving a declining Iranian route alongside a growing dark or unknown category. Kpler said the dark or unknown share never fell below 44% and exceeded 80% by the end of the 60-day period.

Oil and gas flows remain disrupted

The disruption extended beyond crude. LPG crossings fell to zero in mid-July, while LNG carriers stopped transiting for almost three weeks before resuming in late July, with vessels operating largely without AIS visibility.

Kpler pointed out that the pattern showed that the MoU’s early improvement in shipping visibility did not last. The agreement cleared the stranded ships that had accumulated during the blockade, but did not resolve the security, insurance, mine and interdiction risks that continue to constrain traffic through Hormuz.

Iran and US remain divided after MoU expiry

The final weeks of the agreement were marked by further attacks and competing policy measures. On 4 August, Iran approved a separate dual-lane transit framework with zero tolls and plans for mine clearance, but the proposed clearance work did not begin.

When the MoU expired on 17 August, Tehran declared it nullified by US violations and announced mandatory transit permits and maritime environmental tolls. Washington rejected the claims and continued its convoy escorts and blockade enforcement.

Kpler’s assessment is that the market is no longer simply waiting for the Strait of Hormuz to reopen. The physical shipping system has adapted to a more restricted, opaque and higher-risk pattern of exports, leaving the chokepoint operating at only a fraction of its pre-war flow.

Source: safety4sea.com