Key facts
- Over 50 ships transited a southern route around the Strait of Hormuz in three days.
- The route bypasses sea lanes designated by Iran and was established as a temporary corridor.
- 14 crude and oil product tankers, including seven VLCCs and three Suezmaxes, used the route.
- Iran's IRGC warned against using unapproved routes through the Strait of Hormuz.
- War-risk premiums for VLCCs have fallen to approximately 2% of vessel value from about 5%.
More than 50 ships, including 14 crude and oil product tankers, have utilized a southern route around the Strait of Hormuz in the past three days, according to shiptracking data. This route, which bypasses sea lanes designated by Iran, was formalized as a temporary corridor under an International Maritime Organisation (IMO) and Oman-led evacuation plan announced on June 23.
Among the vessels using the route are seven Very Large Crude Carriers (VLCCs), three Suezmaxes, and four other crude or clean product tankers. The corridor has also seen transit by 15 bulk carriers, containerships, LPG and LNG carriers, and other ship types. This period marks likely the busiest usage of the route since the conflict began, with shipping activity recovering following a US-Iran memorandum of understanding aimed at de-escalating hostilities.
At least nine ships have also used the corridor for entry into the Mideast Gulf, including the VLCC Ocean Lily, indicating growing owner confidence in operating in the region. However, the route's usage remains contentious. Iran's Islamic Revolutionary Guard Corps (IRGC) issued a warning against using any routes through the Strait of Hormuz not officially designated by Tehran, describing uncoordinated transit as "unacceptable and completely dangerous."
The IRGC Navy stated that "The only permitted routes for passing through the strait of Hormuz are those which were announced by the Islamic Republic of Iran," and that "Any movement of vessels outside these routes is very dangerous and prohibited."
Market participants anticipate further recovery in tanker activity, supported by lower war-risk premiums. Additional war-risk premiums (AWRPs) for VLCCs have decreased to approximately 2% of vessel value from around 5%. Charterers have secured the Olympic Lady for a crude cargo, a notable VLCC fixture from within the Mideast Gulf since the conflict's onset.
Oil product trade is also showing signs of pickup as transit conditions improve. Mideast Gulf refiners are beginning to offer a broader range of products. Kuwaiti refiner KPC, after lifting force majeure on June 18 following the US-Iran memorandum, has returned to the spot market, selling naphtha for July loading. Further product offers from KPC are expected.