Hormuz transits hit snag as geopolitical risks persist

Commercial shipping through the Strait of Hormuz has once again stalled due to resumption of regional hostilities.

IMAGE: The Strait of Hormuz. Getty Images

Brent's price has moved back towards the $80/bbl mark at the start of the week as the Israel Defense Forces (IDF) continued to strike targets in Lebanon over the weekend, breaching a key provision of the US-Iran peace deal signed last week.

The IDF struck “dozens of Hezbollah terrorist infrastructure sites & terrorists” in southern Lebanon over the weekend, in response to the militant group’s drone strikes, it said on social media platform X.

Shortly after, Tehran announced it had again closed the Strait of Hormuz to commercial vessels as Israel continued to attack Lebanon, Reuters reported.

US President Donald Trump also threatened to resume attacks on Iran if they continued to support its regional proxies including the Hezbollah.

“Iran must immediately stop their highly paid proxies in Lebanon from causing trouble. If they don’t, we’ll hit Iran very hard again,” Trump wrote on social media platform Truth Social.

This development unfolds against the backdrop of ongoing negotiations between Washington and Tehran, aimed at formally ending regional hostilities and restoring commercial vessel traffic through the Strait of Hormuz.

“Oil prices are higher… as tensions between the US and Iran remain elevated despite a temporary ceasefire,” two analysts from ING Bank noted.

Diplomacy vs reality

Meanwhile, the first round of talks between the US and Iran in Switzerland ended earlier today, amid the resumption of cross border firing, Reuters reported citing mediators.

Both countries have agreed to a roadmap toward a final peace deal within the next 60 days that will subsequently end hostilities in Lebanon and reopen the Persian Gulf to vessel traffic, the report added.

A total of 18 vessels transited the Strait of Hormuz between 17-18 June, according to data from maritime intelligence firm Windward. Three Saudi-flagged tankers carrying about 6 million bbls of crude oil transited the Strait during the same time, Windward reported.

The US Central Command (CENTCOM) said that 17 million bbls had passed through the Strait of Hormuz on Saturday.

Last week’s decline in oil prices was based on the premise that the Middle East conflict had ended, signalling a surge in oil flows through the region. However, the situation on the ground remains far more nuanced, according to market analysts.

The US-Iran peace agreement lacks comprehensive regional backing since Israel and Lebanon-based Hezbollah are not signatories to the US-Iran peace agreement. Israel has remained steadfast in its vow to continue military action in southern Lebanon until its security concerns are fully addressed, while Hezbollah continues to demand a total Israeli withdrawal as a prerequisite for any permanent cessation of hostilities.

“Recent developments show that moving towards a more permanent deal will be challenging, with very real risks of a flare-up in hostilities during the 60-day ceasefire,” ING Bank’s analysts added.

By Aparupa Mazumder

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