Middle East Tensions Spark Dramatic Decline in Hormuz Shipping Traffic

Shipping traffic through the Strait of Hormuz plummeted to a mere seven vessels over the past 24 hours, down from an average of 15 per day in both directions. This drastic decline comes as tensions in the Middle East continue to escalate, with hostilities, strikes on tankers, and threats from Iran-aligned Houthis contributing to the instability.

According to preliminary vessel-tracking data by Kpler, only two vessels were outbound, while five were inbound through the Strait of Hormuz. However, experts believe that dark transits, where vessels switch off their AIS systems to avoid detection, are significantly higher.

The situation has become increasingly fragile, with oil prices jumping above $100 per barrel this week and expected to close out the trading week at or above this mark for the first time since May. ING's commodities strategists Warren Patterson and Ewa Manthey noted that 'oil's resilience reflects a market now repricing both the duration and severity of the conflict, along with a clearer recognition of the mounting threat to regional supply.'

The Strait of Hormuz is crucial for global oil supplies, with estimates suggesting around 10 million barrels per day exit the Strait, half the pre-war levels. This has further exacerbated tight middle distillate markets.