Oil prices rebound as Strait of Hormuz remains largely blocked despite fragile US-Iran ceasefire

Oil prices rebounded sharply on Wednesday after posting their biggest one-day drop since April 2020, as the Strait of Hormuz remained largely blocked despite a fragile US-Iran ceasefire, with only a handful of vessels managing to transit the vital waterway.^[1][2] The strait, which handles about one-fifth of global oil trade, has been effectively closed for nearly six weeks due to Iranian attacks and warnings, stranding hundreds of tankers in the Persian Gulf and disrupting energy supplies worldwide.^[1][4] Israeli strikes on Lebanon have further threatened the truce, adding to market volatility.^[1]

The ceasefire, announced just a day earlier, was meant to pause fighting in exchange for reopening the strait, but implementation has been slow and uncertain.^[7] BBC Verify analysis showed only a few vessels crossing since the deal, while maritime data from services like MarineTraffic recorded initial movements such as the Greek-owned bulk carrier NJ Earth and the Liberian-flagged Daytona Beach transiting early Wednesday.^[2][3] Iran has issued fresh warnings against unauthorized ships and signaled plans to impose tolls on passage, a development described as unthinkable a month ago by Bloomberg analysts.^[3][5] This has left major shipping firms cautious, with companies like Maersk, Hapag-Lloyd, Japan's Mitsui OSK Lines, and others monitoring the truce's details before committing vessels.^[1][6]

Two fully laden Chinese oil tankers joined a queue outside the strait, positioning themselves as potential first major exits under the ceasefire, while Asian refiners express growing interest in restoring flows.^[5][2] Hundreds of vessels—roughly 426 tankers, 34 LPG carriers, and 19 LNG ships—remain sidelined in the area, creating a massive backlog that could take weeks to clear if stability holds.^[3][4] Earlier in the crisis, starting February 28, Iran conducted 21 confirmed attacks on merchant ships, dropping tanker traffic to near zero and prompting insurers to deem the zone high-risk with elevated war premiums.^[1]

The blockage has rippled through global markets, forcing reroutes around Africa's Cape of Good Hope, inflating shipping costs, and spiking oil prices before the recent plunge and rebound.^[1] Countries like India evacuated LPG carriers with naval escorts, but broader trade suffered as container giants suspended routes.^[1] Energy consumers worldwide, from Europe to Asia, face higher costs and supply risks, while producers in the Gulf see stranded cargoes.

Looking ahead, shipping's gradual resumption hinges on ceasefire enforcement and clarity on Iran's tolls and permissions.^[2][6] Experts like Jennifer Parker from the UWA Defense and Security Institute note ongoing regional fighting, including Israeli actions in Lebanon, raises doubts about full reopening.^[7] If the truce falters, oil markets could face renewed surges; if it holds, backlogged shipments may ease price pressures in coming days.^[4] Industry insiders emphasize continuous risk assessments, with no full maritime certainty yet achieved.^[4]