Energy flows through the Strait of Hormuz are beginning to restart on Thursday after the interim U.S.-Iran peace deal, with several Saudi-controlled supertankers transiting the critical waterway and exiting the Persian Gulf.
There is a massive backlog of crude and LNG tankers in the Persian Gulf, preparing to exit the Hormuz chokepoint bound for Asia. Bloomberg says 31 supertankers, carrying about 62 million barrels of crude, could soon exit.
The actual number of crude and LNG tankers preparing to exit could be much higher, as some tankers may turn off their transponders. Once exited, many of those tankers are slated for ports in East Asia and will take roughly three weeks to arrive.
One of the key developments overnight was that three Saudi-controlled supertankers, including Bahri-controlled Saudi VLCCs Shaden, Jaham, and Awtad, switched on their transponders and began exiting the Persian Gulf.
Maritime traffic remains far below normal levels and could take many months to return to normal.
"There are certain practical steps that we believe are necessary before the vessels that have been stranded in the Gulf for the last 110 days can resume transiting the Strait of Hormuz," Sheila Cameron, CEO, and Neil Roberts, head of marine and aviation at the Lloyd's Market Association, told Bloomberg in a statement.
Cameron continued, "The main requirement for recovery is stability and certainty for shipowners and insurers. The road to recovery in the Gulf will be a long and complicated one. It will take months for some sort of normality to return to international shipping with vessels in the wrong place and supply chains distorted."
Daan Struyven, Goldman Sachs' co-head of Global Commodities Research, told clients, "We now assume that Persian Gulf exports normalize to pre- war levels by the end of July."
On Thursday morning, Brent crude futures fell below $78, while West Texas Intermediate was near $74. Traders are already pricing in the coming flood of seaborne crude.
Dubai and Murban crude futures curves have flipped into contango, Oman crude is trading at a discount to Dubai, and some diesel cargoes are trading below benchmark levels after commanding lofty premiums.
The first signs of normalization are already visible, following President Trump's acknowledgment on Wednesday at the G7 Summit that the interim peace deal with Iran to reopen Hormuz was signed as the U.S. was nearing the point of "running out of reserves in about four weeks."
Struyven noted that even if the expected "normalization" occurs by the end of next month, flows may recover to only 70% of pre-war levels ...
Latest overnight headlines (courtesy of Bloomberg):
US-Iran Peace Deal
• President Trump signed an interim peace deal with Iran on Wednesday evening at the Palace of Versailles, following the G7 summit
• The deal is now in effect and was signed electronically by both presidents, according to US and Iranian officials
• The memorandum of understanding opens the way for 60 days of negotiations on Iran's nuclear program and other issues
• Iran will receive sanctions waivers allowing it to sell oil immediately and gain access to a $300 billion economic development program
• Defense Secretary Pete Hegseth said the US can reimpose an ironclad blockade if Iran doesn't comply with the deal
Strait of Hormuz Reopening
• Three Saudi supertankers carrying about six million barrels of oil exited the Strait of Hormuz on Thursday, marking the first Saudi-owned crude tankers to cross since the war began
• A laden LNG carrier and an empty products tanker crossed the Strait of Hormuz early Thursday, sailing along a route approved by Tehran for safe passages
• Qatar brought an empty LNG tanker back into the Persian Gulf through the Strait of Hormuz for the first time since the war began on Thursday
• Goldman Sachs estimates oil flows through the Strait of Hormuz may recover to only about 70% of pre-war levels, with normalization potentially completed by the end of next month
Economic Impact
• US gasoline prices fell below $4 a gallon on Thursday for the first time since March, down from a May peak above $4.50
Deal Criticism and Complications
• Trump faced pushback from Republicans who object to the deal and the billions of dollars set to flow to Tehran
• Trump brushed aside several red lines on Wednesday, suggesting Iran should have the right to enrich uranium, develop ballistic missiles and access frozen funds
• Israel rejected a US request to withdraw troops from southern Lebanon, citing continued presence of Hezbollah, threatening to complicate broader peace efforts
Iran Leadership Investigation
• The US Justice Department is conducting a probe into how Iran's Supreme Leader Mojtaba Khamenei built a global investment portfolio with exposure to Wall Street banks, examining allegations of money laundering and corruption
Related Legal Developments
• A federal judge allowed the Justice Department to drop a criminal case against Turkish state-owned Halkbank on Wednesday for allegedly helping Iran evade US sanctions