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European Oil Markets
23JUL

Hormuz logged two ships, not 94

3 min read
19:27UTC

Two ships transited the Strait of Hormuz across 15-16 June, against a pre-war rate of 94 a day. The memorandum promises a full reopening on Friday, yet not one major operator has routed a tanker through on the strength of it.

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EconomicDeveloping
Key takeaway

Markets are pricing the gap between the signed deal and a moving tanker, not the deal itself.

Two ships transited the Strait of Hormuz across 15-16 June, the 33-kilometre Gulf chokepoint that carries about a fifth of the world's seaborne oil. 1 Before the war the strait handled roughly 94 vessels a day. The newly signed memorandum promises a full reopening when the deal is formalised in Geneva on Friday, yet no major operator has sent a tanker through on the strength of it.

Underwriters, not nerves, keep the tankers in port. Protection-and-indemnity clubs, the mutual insurers that cover a vessel's third-party liability, will not underwrite a Hormuz crossing while the IRGC, Iran's Islamic Revolutionary Guard Corps, still runs the toll authority it set up on 5 May and has refused to dissolve. Iran reasserted its sovereignty over the strait and its right to charge for passage the day of the signing , so the clubs have no security grounds to reinstate cover. Without cover, no major charterer sails. Jotaro Tamura, a shipping executive quoted by the Financial Times, said operators will wait weeks until conditions change "on the water". 2

Brent Crude settled near $83.61, down a further 4.3 per cent and below the two-month low it had already reached when the deal first looked probable . That is not a peace dividend. Traders are pricing the distance between signed paper and a moving tanker, discounting the chance that Friday produces actual flows rather than a ceremony. Lower crude eases fuel costs for importers, but with the toll authority intact and the underwriting absent, the relief rests on cargoes no one will yet insure.

Deep Analysis

In plain English

The Strait of Hormuz is a narrow waterway between Iran and Oman through which roughly one-fifth of the world's oil travels. Before the war, about 94 ships passed through each day. On 15-16 June, only two did. Shipping companies cannot send a vessel worth hundreds of millions of pounds into the strait without insurance covering seizure or damage. Protection-and-indemnity clubs, which cover almost all large cargo ships, have refused to write that cover since March. The major insurance clubs, which together cover almost all big cargo ships, will not write that cover while Iran's military still controls the waterway and there is no written, legally binding safety framework. A signed-but-unpublished diplomatic document does not change that. Until the insurance question is resolved, oil tankers will wait outside regardless of what politicians announce.

Deep Analysis
Root Causes

P&I cover for Hormuz transits ceased because two separate legal conditions remain unmet. First, Lloyd's Joint Hull Committee guidance, circulated on 19 May 2026 , requires either a written rules-of-engagement document from the 26-nation coalition or a published PGSA (Persian Gulf Strait Authority) transit framework before the market will price the route.

Neither exists. Second, the IRGC's Persian Gulf Strait Authority, created 5 May, has registered zero commercial vessels; the MOU does not dissolve the PGSA, meaning the authority that P&I clubs treat as an extortion mechanism remains operational on the day of the signing.

The market's assessment is therefore that paper diplomacy has not changed the operational facts: the IRGC can still board, delay or seize vessels in Iranian territorial waters, and no insurer has indemnity protection against that outcome.

What could happen next?
  • Consequence

    P&I clubs will not restore cover until either a UN Security Council resolution or a published government certification of safe transit exists, conditions that neither the MOU nor the Geneva ceremony address.

    Short term · Assessed
  • Risk

    If a vessel transits without P&I cover and is seized or damaged, the resulting uninsured loss falls on the ship owner directly; no government indemnity mechanism currently exists.

    Immediate · Assessed
  • Opportunity

    Iranian crude re-entering the market at full pre-war volume would release approximately 1.5 million barrels per day, worth roughly $4-5 per barrel on the Brent price, if Hormuz fully reopens within a 60-day window.

    Medium term · Suggested
Sources:Financial Times
Mentions:Strait of Hormuz →Brent Crude →Islamic Revolutionary Guard Corps (IRGC) →Financial Times →VLCC →Tanker War →Lloyd's of London →IUMI →London →Geneva →Iran →Yemen →Persian Gulf →United States →Dubai →Oman →Kuwait →Gulf Research Centre →Iraq →Persian Gulf Strait Authority →UK Ministry of Defence →European Union →
First Reported In

Update #129 · Iran deal signed, but no paper to show

Financial Times· 16 Jun 2026
Read original →
Causes and effects
Caused by
Iran and US name Hormuz two ways
Iran's assertion of Hormuz sovereignty and paid passage on 15 June kept the IRGC toll authority operational, blocking P&I cover for tanker transits.
Occurred 15 Jun 2026
Read story →
Brent hits two-month low on deal bets
Brent's further fall to $83.61 extended the two-month-low trajectory that began when markets priced 80 per cent deal probability.
Occurred 12 Jun 2026
Read story →
This Event
Hormuz logged two ships, not 94
Insurers, not Iranian permission, hold the strait shut; without P&I cover no major charterer sails whatever the memorandum says.
Led to
500 ships idle as Hormuz stays shut
The two IRGC toll transits on 15-16 June were explicitly not a reopening, establishing the zero-new-transit baseline that persisted after the MOU signing.
Occurred 16 Jun 2026
Read story →
Different Perspectives
US money managers (CFTC-tracked)
US money managers (CFTC-tracked)
US money managers had trimmed WTI net long positioning into July's rally, doubting the Hormuz premium would hold without freight or war-risk confirmation, and the crude stock build reported for the week to 17 July gives that scepticism a fundamentals basis. The 25 July CFTC data will show whether Brent's move above $100 changed their calculus.
Asian distillate buyers (Singapore)
Asian distillate buyers (Singapore)
Singapore's distillate holders kept retaining middle-distillate barrels as the East-West arbitrage window narrowed further this week, a pattern that sharpened as Fujairah light distillates hit a record low. Cargoes are being held rather than released west into the tightening Mediterranean market.
Bulgaria
Bulgaria
Bulgaria secured the removal of Lukoil founder Vagit Alekperov and Patriarch Kirill from the 21st package, with President Rumen Radev calling a personal listing 'shooting ourselves in the foot'. Sofia is protecting its position in Lukoil's EUR 3bn compensation claim over the 2023 Neftohim Burgas nationalisation.
Russia
Russia
Russia loses the roughly $14 a barrel of legal headroom the price-cap formula would have released toward $58, even as Urals continues trading below Moscow's $59 budget floor. The shadow-fleet insurance workaround that lets sanctioned crude clear above $44 in practice remains untouched by the freeze itself.
European Union
European Union
The EU adopted its 21st sanctions package on 23 July, freezing the $44 Russia oil cap for 12 months rather than letting the formula drift it toward $58, and listed shadow-fleet support vessels for the first time. The package cleared only after three failed Coreper votes.
Marine war-risk underwriters (Lloyd's-linked syndicates)
Marine war-risk underwriters (Lloyd's-linked syndicates)
War-risk syndicates lifted southern Red Sea hull premiums 150% to about 0.75% of hull value after the 20 July blockade declaration, still a seventh of the roughly 5% Hormuz band. Underwriters reset on realised loss, not declared threat, so the 23 July Encelia and Layla strikes set up the next re-mark.