US-Iran deal must be ‘material’ for Strait of Hormuz to reopen, tanker giant warns

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US-Iran deal must be ‘material’ for Strait of Hormuz to reopen, tanker giant warns

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Shipowners will not resume transit through the Strait of Hormuz for weeks until they are confident that the US-Iran deal is “material”, the head of the world’s biggest tanker operator has warned.

Jotaro Tamura, chief executive of Mitsui OSK Lines, told the FT that many operators would wait before restarting crossings despite the US-Iran deal to reopen the strait.

US President Donald Trump has insisted there is a “safe, secure and pristine” route through the strait, which has been almost completely shut since late February. Sunday’s deal sent the price of Brent crude lower but Tamura said traffic would not immediately return to normal.

“What will have to come in place is not just a simple agreement between the relevant countries, but it has to be material and translated into the real situations in the Strait of Hormuz, so that shipping lines can make themselves comfortable to go through,” he said.

Tamura noted that there had been multiple false starts over the waterway’s reopening since the Middle East conflict erupted in late February.

“Given the experiences in the last couple of months, I think it’s reasonable to assume that it may take at least a couple of weeks or if not a month,” he added.

Tamura was speaking before Trump announced the deal, which is expected to be signed on Friday, but MOL said on Monday that the agreement being finalised had not changed his view.

Before the war, more than a fifth of global oil and liquefied natural gas was transported via the strategic waterway, which is also crucial for the transport of cargoes of grain and consumer goods into the Gulf.

MOL operates more than 900 ships, of which more than 200 carry crude oil, petroleum products and chemicals, making it the world’s largest tanker operator by number of vessels.

Other shipping companies and owners have also said that the International Maritime Organization, a UN body, should co-ordinate the exit of around 500 ships needing to pass through the strait to exit the Gulf.

Arsenio Dominguez, IMO secretary-general, said it was “assessing the feasibility for vessels to transit and conduct the trade safely and securely, avoiding possible hazards like mines as well as congestion which could lead to accidents”.

He added that the IMO was continuing to work on a safe evacuation corridor for seafarers who have been stuck in the Gulf for more than 100 days.

Hapag-Lloyd, one of the largest container shipping lines, said that the news of a peace deal was “encouraging” and that the company hoped that its vessels stuck in the strait would be able to leave “this weekend”.

Philip Belcher, marine director of tanker industry association Intertanko, warned that “a cautious approach should be undertaken” and vessels should carry out their own “ship-specific” risk assessment before sailing.

Before the war in Iran, about 135 ships passed through the strait every day. That number has fallen to a trickle with some vessels attempting to sneak out of the Gulf in recent weeks under cover of darkness and with their GPS turned off.

Despite the ongoing tit-for-tat strikes, some shipowners such as the Greek tanker company Dynacom have continued to trade throughout the US-Iran stand-off, while others have said that they anticipate a rapid return to normal trade.

MOL chief Tamura’s comments highlight that others will take a more cautious stance on resuming shipping, even after the extension of the ceasefire.

Tamura, who took over in April, said he opposed Iran’s attempts to charge a fee to pass through the strait on the basis that it would contravene international regulations that allow for freedom of navigation.

The Japanese shipping line had managed to get four vessels out of the Gulf before the deal to reopen the strait, but Tamura said no fees were paid to Iran. MOL still has at least seven ships waiting to transit the strait.

Japanese Prime Minister Sanae Takaichi has said that the transits were the result of Japanese efforts. However, Tamura heavily hinted that their passage was secured by the diplomacy of other countries — such as Oman and India — that had links to the vessels through their flag, the customer or the cargoes’ destination.

“In some cases where successful transits took place, particularly in these situations, the relevant authorities or governments had worked [it] out, so we had some fortunate cases,” he said.

MOL shares have risen by a fifth in Tokyo this year, valuing the company at about ¥2.1tn ($13bn), as activist investor Elliott Management demands changes to boost returns.