Five days into the regional war and tensions are showing slowing signs of easing. Tehran has issued its strongest warning yet over Hormuz, while attacks on energy infrastructure continue beyond the Gulf itself.

Shipping on edge as Iran tightens grip on Hormuz

Iran makes its position on Hormuz crystal clear: Iran is vowing to attack any vessel attempting to transit the Strait of Hormuz, and it is not bluffing –– a ship was already targeted for “illegally” passing through the strait earlier this week.

Nearly 147 vessels are idle within the Gulf, as are a group of 10 vessels harbored in Iran, in addition to half-a-dozen ships waiting outside the strait. Shipping giants Maersk and Hapag-Lloyd, who have ships trapped in the Gulf, have suspended reefer and special cargo acceptance in and out of the region until further notice. CMA CGM has rerouted all West and East-bound voyages via the Cape of Good Hope.

Mediterranean ports could witness an uptick in traffic as shipping firms look to reroute vessels away from the Gulf and shed cargo originally headed for the now-blocked ports. CMA CGM is rerouting all cargo on its PHOEX service to and via Jeddah to Egypt’s Alexandria port, according to a note seen by EnterpriseAM.

The key question is, how long will tankers continue to avoid the strait? “A few days of interruption would not have too great an impact on the global market, with schedules re-arranged and companies drawing from gas storage,” ICIS LNG analyst Alex Froley said.

The duration of this crisis could make or break us: The longer the disruption lasts, “the more the impact will grow, affecting not just current supply, but also the ability of Europe and other regions to refill storage for next winter, meaning even a relatively short impact could have effects rippling through into 2027,” he explained.

GCC infrastructure hit

GCC energy infrastructure struck for a second day: A fuel tank was hit at Oman’s Duqm port as it came under attack from several unmanned aircraft. The damage to the tanker was quickly controlled, resulting in minimal disruption. Oman’s Salalah Port was also struck by a drone, with a loud explosion heard and plumes of smoke seen rising from the port area. The attack has been one of several on oil infrastructure in the region.

Over in the UAE, oil storage tanks in Fujairah were hit by falling debris, resulting in a fire at theJSW terminal.

“The importance of Fujairah cannot be overstated,” Wood Mackenzie Oil, Fuels, and Geopolitics Director Ian Simm said on LinkedIn. “Iran's strategy is clear: disrupt in any way it can US military operations through the targeting of industrial and administrative facilities that support those operations,” he added.

SOUND SMART- The attack on Fujairah is something to keep an eye on: Fujairah houses our sole bypass around the Strait of Hormuz — the Adcop, or the Habshan-Fujairah pipeline, which connects Adnoc’s Habshan crude oil processing plant in Abu Dhabi with the Fujairah export terminal on the Indian Ocean. We did a deep dive into the pipeline’s importance in a story last year — check it out here.

The ongoing military operations also pushed Iraq to suspend all crude oil shipments through the Kirkuk-Ceyhan pipeline to Turkey’s Mediterranean coast, removing approximately 200k bpd from global markets and threatening the already fragile economy of the Kurdistan Region of Iraq, which is reliant on these exports.

Iraq had lost access to its southern export route through Basra due to the closure of Hormuz, and now its valve in the north has also been shut off. The halt of the Kirkuk-Ceyhan pipeline removes the major viable alternative route Iraq had to reach international markets via the Mediterranean.

With no clear alternative, Opec’s second-biggest producer is shutting down production at both the Rumaila field and the West Qurna 2 project, effectively cutting off some 1.2 mn bbl / d starting yesterday as storage fills up. Some two-thirds of the country’s crude output could also be shut down within days if Hormuz remains closed.

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