Strait of Hormuz Traffic Slumps as Sanctions Tighten

The insurance market has effectively sealed the Strait of Hormuz, preceding any formal U.S. legal action. On August 20, Kpler recorded only seven commodity vessels crossing the waterway—half the number seen the day before. The ten-day average as of August 19 fell to 11 vessels per day, a stark contrast to the pre-war level of more than 100 daily crossings recorded on August 3. Simultaneously, Iran’s Central Bank Governor Abdolnaser Hemmati confirmed that the country has ceased oil exports.

The Banker Said the Quiet Part

Before the conflict, the strait supported a bustling flow of over one hundred ships of all types each day. Insurance premiums for Hormuz transits have surged dramatically: the additional war-risk premium rose to 7.5 %–10 % of hull value, compared with a pre-war rate of roughly 0.25 %. These figures were reported in late June and again in late July, reflecting the market’s rapid adjustment to heightened risk.

The Banker Said the Quiet Part

Governor Hemmati told state television that “the same thing has happened to us and it is a reality that we are not exporting oil.” He added that oil-sale revenues for Iraq and Qatar have also dropped to zero. In Baghdad, Parliament Speaker Mohammad Bagher Qalibaf urged Iranian and Iraqi business leaders to devise strategies to “overcome the unjust sanctions,” proposing direct currency trade between Tehran and Baghdad as a mitigation measure.

The Banker Said the Quiet Part

• July 22 / June 28: War-risk premium for Hormuz transits = 7.5 %–10 % of hull value; pre-war premium ? 0.25 % (Marsh’s Marcus Baker).

The Banker Said the Quiet Part

• August 3: >100 vessels of all types crossed daily (pre-war baseline).

The Banker Said the Quiet Part

• August 19: 10-day average = 11 commodity vessels per day.

The Banker Said the Quiet Part

• August 20: 7 commodity vessels crossed (half of the prior day’s tally).

The Banker Said the Quiet Part

A formal announcement scheduled for August 24 is expected to codify the de-facto closure already enacted by Chinese tankers and the Lloyd’s market. The proposed Iraq-Iran currency trade, highlighted by Speaker Qalibaf, represents the primary strategy being discussed to sustain trade under the “toughest sanctions in history.”

The Banker Said the Quiet Part

• “The same thing has happened to us and it is a reality that we are not exporting oil,” — Abdolnaser Hemmati, central bank governor

The Banker Said the Quiet Part