Ship traffic through the Strait of Hormuz, a 33-kilometre narrow passageway connecting the Persian Gulf to the Gulf of Oman, plummeted after the joint military strikes by the US and Israel on Tehran.
Ship tracking platform MarineTraffic showed a 70 per cent drop in vessel traffic through the Strait late in the evening on Saturday, Dimitris Ampatzidis, a senior risk and compliance analyst at Kpler, MarineTraffic’s parent company, told The New York Times.
On Sunday afternoon, a Palau flagged Skylight tanker vessel, 5 nautical miles north of Khasab Port off the coast of Musandam peninsula in Oman was hit by a Iranian drone strike. At least four people were injured in the attack, Oman's Maritime Security Centre (MSC) confirmed. The oil tanker had a 20 person crew, 15 Indians and 5 Iranian nationals.
Facilities at the Port of Duqm in Oman were also targeted by two drones, despite Muscat being a mediator in the tensions just last week.
Iran's Islamic Revolutionary Guard Corps on Saturday sent VHF transmission messages to ships telling then that no ship is allowed to cross the strait. However, a formal closure announcement regarding a full closure have not been made.
“Saudi Arabia, Iraq, the United Arab Emirates and Qatar are the most exposed,” said Ampatzidis, “as the majority of their seaborne crude and liquefied natural gas exports pass through Hormuz.”
Several senior traders have taken Iran’s threats as credible and have halted all of their shipment throught the Strait. Shipping firms suspended their shipments and rerouted their tankers amid the safety concerns.
One tanker was seen making a U-turn near the Bab el-Mandeb on Saturday amid fears of Houthi attacks on commercial shipping.
Hapag-Lloyd suspended all of its vessel transits through the strait.
However, some traffic still continued. It is also not clear if some vessels travelled through the strait with their AIS switched off.
As traffic at the Strait drops, oil prices are expected to trade higher in the coming days if the conflict escalates and there are further disruptions.
About 30 per cent of the world traded oil and petroleum products from countries like Saudi Arabia, Kuwait, Iraq and Iran pass through the strait daily according to Lloyds list.
The Strait has been subject to pressure amid conflict as Iran periodically asserts control over the international passage.
However, Iran is unlikely to shut down passage completely, even with the recent warning to ships.
Cutting off the Strait could invite a further naval response from the US making Iran's ports vulnerable.
Even minor drops in shipments could also affect the already volatile oil market and Iran’s own crude oil trade. The country exports about 1.65 million barrels per day of crude oil and gas condensate, according to Kpler.
A majority of Iran’s experts also move to China and a potential shutdown would then mean pressure from the country. A prolonged shut down of the strait, would be hard to maintain and could result in an increase in oil prices, supply chain disruptions and broader economic strains in the region.
Iran also has never actually attempted to shut down the Strait of Hormuz officially despite issuing warnings since 1979.