ICYMI: Iran fires on cargo ship in Hormuz strait, UN halts evacuation as oil price bounce
The attack reignites the core risk that tankers will again become reluctant to transit the strait, threatening to crimp oil flows before storage across the Gulf can be worked down. With Gulf storage tanks running at 50% to 60% of capacity, any sustained disruption to Hormuz traffic could force producers to throttle output and push a full supply recovery into next year. The WSJ report that Iran is eyeing billions in annual fees from strait users adds a separate layer of friction, with the US and GCC having explicitly rejected any tolls or control mechanisms as part of a lasting deal. Lebanon also remains an unresolved flashpoint, with ceasefire talks at a dead end and Iran’s Quds Force issuing withdrawal warnings to Israel.
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Iran fired on a cargo ship near the Strait of Hormuz, halting the UN evacuation plan and lifting oil prices higher as fears over the preliminary peace accord resurfaced.
Summary:
- Iran’s IRGC fired on a Singapore-flagged cargo vessel near the Strait of Hormuz on Thursday, according to two US officials cited by Reuters, with Iranian authorities warning that vessels transiting outside designated routes cannot be guaranteed safe passage
- The UN International Maritime Organization paused its effort to evacuate stranded ships and seafarers from the strait following the attack, pending further clarity, per the IMO
- Oil prices settled higher on Thursday, with both WTI and Brent rising more than 2%, per market data; technical short-covering also contributed to the rally according to analysts
- Gulf storage tanks are running at 50% to 60% of capacity, and if tanker traffic through the strait does not recover quickly producers may need to cut output, with a full supply recovery potentially slipping into next year, according to Rystad Energy
- US Secretary of State Marco Rubio told Gulf allies that no deal with Iran would include shipping fees or tolls, after the Wall Street Journal reported Iran estimates it could earn around $40 billion a year by charging for services in the strait
Oil prices climbed higher on Thursday after Iran fired on a Singapore-flagged cargo ship near the Strait of Hormuz, prompting the United Nations maritime agency to freeze its evacuation plan for vessels trapped in the waterway and stoking fresh fears that the fragile preliminary accord between the United States and Iran may not hold.
Two US officials told Reuters that Iran’s Islamic Revolutionary Guard Corps carried out the attack as the vessel attempted to transit the strait. Iranian authorities subsequently warned that the security of ships passing outside designated Hormuz routes could not be guaranteed, a statement that effectively placed the burden of safe passage back onto individual vessel operators and their insurers.
The UN International Maritime Organization, which had been coordinating an effort to shepherd stranded ships and seafarers through the strait, said it was pausing that operation until further clarity was obtained. The suspension was a significant setback: the resumption of strait traffic had been one of the tangible early signs that the US-Iran ceasefire was beginning to take hold, with crude shipments through the passage having risen to their highest level since the war began just days earlier.
Both crude benchmarks had slid to multi-month lows on Wednesday, closing at their weakest since February 27, the day before hostilities began. Thursday’s reversal reflected a rapid reassessment of that optimism. Analysts noted that benchmarks had become increasingly oversold in recent sessions, and said technical buying and short-covering amplified the move higher.
The broader supply picture adds urgency to the Hormuz question. Gulf storage tanks are running at 50% to 60% of capacity, and warned that if tanker traffic through the strait does not recover in the near term, producers could be forced to throttle back output, pushing a full supply recovery into next year.
Separately, a Wall Street Journal report said Iran has calculated it could generate around $40 billion a year by charging fees for security, safety and environmental services in the strait. That figure drew a sharp response from US Secretary of State Marco Rubio, who told Gulf allies during a regional trip that no country has the right to charge for the use of international waterways and that fees would never be part of any final agreement. The US and the six-member Gulf Cooperation Council jointly backed free, unconditional and unrestricted navigation through the strait.
Lebanon added another layer of uncertainty to the geopolitical picture. Talks between Lebanon and Israel reached a dead end over the question of Israeli withdrawal from southern Lebanon, and Iran’s Quds Force issued a warning that Israel would be forced to withdraw if it had not done so by Friday. The situation remains a domestic flashpoint for now, but carries the risk of drawing Iran back into a broader confrontation.
This article was written by Eamonn Sheridan at investinglive.com.