After high-stakes peace talks in Islamabad collapsed over the weekend, the future of a fragile ceasefire between the US and Iran now appears to rest on a 100-mile waterway between the Persian Gulf and Arabian Sea.
The United States imposed a blockade on Iranian ports and coastal areas east of the Strait of Hormuz, which came into effect at 3pm BST on Monday.
US Central Command warned that vessels will be subject to “interception, diversion and capture” regardless of their flag. More than 15 US warships are in place to support the operation, a senior official told The Wall Street Journal.
President Donald Trump threatened that ships sailing from Iranian ports would be subject to “the same system of kill that we use against the drug dealers on boats at Sea”, referring to the administration’s controversial attacks on boats off the coast of Venezuela.
Oil prices surged in response to the threats, but the US military insisted that the action would “not impede” the movement of ships carrying humanitarian goods, such as food, through the Strait of Hormuz.
A US-sanctioned Chinese tanker, the Rich Starry, appeared to sail straight through the Strait on Tuesday in apparent defiance of Mr Trump’s blockade. But it later made a U-turn in the Gulf, with US Central Command saying some merchant vessels had “complied with direction from US forces to turn around”.
What does Trump’s blockade involve?
In practice, President Trump’s blockade will impact vessels departing from Iran’s ports and coastline, regardless of their country of origin. The US has explicitly said it will not target vessels that aren’t linked to Iran or its ports, but those that are will be intercepted, diverted or captured.
However, the US leader has also ordered the navy to hunt down vessels that have paid Iran a transit toll, which includes Chinese tankers and Indian bulk carriers that are not parties to the conflict, according to Professor Barry Appleton, co-director for international law at New York Law School.
“You have a narrow, mine-threatened strait, active hostilities, and now the US Navy is being asked to police every vessel entering or leaving Iranian ports,” he told The Independent.
“That’s not a blockade. It is more akin to a traffic enforcement operation in the middle of a war zone.”
How has Iran prepared for the blockade?
Iran appears to have a number of tricks up its sleeve to circumvent the impacts of the blockade, including floating storage, shadow fleet tankers, and the use of alternative ports.
According to marine traffic data analysed by Kpler, five liquid tankers transited the Strait of Hormuz in the first two days of the blockade, for all categories – liquids, LNG, LPG, and dry bulk – a total of eight vessels crossed between 13 and 14 April.
On Tuesday, a further five vessels crossed the Strait, but it is important to note that the blockade is not within the Strait but further outside the Gulf of Oman. Kpler told The Independent that four tankers carrying Iranian crude are idling in the Gulf of Oman. One ship passed through on Wednesday.
“The objective is to constrain Iran’s ability to export crude and condensate, which could eventually lead to production shut-ins,” Kpler’s senior crude analyst Johannes Rauball told The Independent.
But Tehran appears to already have copious stores of oil offshore, ahead of the restrictions, and the volumes of its oil in transit also remain elevated, according to Kpler.
This week, floating storage of Iranian crude – a method of storing oil and gas on open waters away from land or ports – rose to 42 MMbbl (or 42 million barrels) up from 38 MMbbl on Sunday, 12 April.
Floating storage is defined as crude-carrying tankers that have remained idle and reduced their speed for at least seven days, essentially “waiting for instructions” on water.
Because the Iranian oil supply is exceeding demand, some tankers have been unable to discharge their load and find buyers.
“While any reduction in Iranian exports would primarily impact China, which absorbs the vast majority of these flows, overall availability of Iranian crude is expected to remain ample,” explained Mr Rauball.
“We are observing significant concentrations of floating storage near China, including roughly 15 MMbbl in the Yellow Sea and around 7 MMbbl in the South China Sea.”
Mr Rauball suggests that this could mean up to 120 days of availability of Iranian crude for China, suggesting Iran is unlikely to be impacted by the blockade anytime in the near future due to “substantial volumes already on the water”.
“In total, Iranian crude on water – including both floating storage and cargoes in transit – stands at approximately 190 MMbbl,” he explained.
“With China typically importing around 1.5 MMbbl/d of Iranian crude, this implies roughly 120 days of cover under current conditions.
“As such, even if Iranian crude exports decline, near-term availability is unlikely to tighten significantly, given the substantial volumes already on water.”
Furthermore, Iran’s shadow fleet of tankers poses a further challenge to the US Navy, shipping experts have warned in comments to The Wall Street Journal, allowing vessels linked to ports to transit undetected using sophisticated methods. According to Lloyd’s List, a falsely-flagged, US-sanctioned tanker linked to China exited the strait early on Tuesday.
“It’s important to note that we should expect more AIS manipulation in the region where ships coming from Iran may pretend to be sailing from different countries to mask the country of origin,” says Noam Raydan, an analyst at the Washington Institute. AIS refers to a maritime tracking system that broadcasts a ship’s identity, position and speed.
Chatham House analyst Neil Quilliam says it is “too early to tell” whether Mr Trump’s blockade has been effective.
He said: “It certainly complicates the movement of vessels that Iran permits to pass through Hormuz. The passage of the Chinese tanker shows that some ship owners and their crews have a high risk tolerance and are willing to test the US, making it a test of who blinks first. It is a high-stakes game.”
Unmanned underwater vehicles – which can loiter underwater for up to 96 hours – can also pose a threat to billion-dollar US naval assets, according to the political analyst Safi Ghauri.
After nearly half a century of sanctions, further structural pressure may not hit Iran as hard as other nations, according to Ashok Kumar, associate professor of political economy at Birkbeck, University of London.
“Trump’s plan to ‘blockade the blockade’ is strategically incoherent,” he said. “It’s a gesture of desperation, not strength. Iran has already moved vast quantities of oil offshore, so much of its supply simply sits beyond the reach of any naval cordon.”
On Wednesday, it was reported that Tehran will use alternative ports to those in southern Iran to bypass the US blockade on the Strait of Hormuz, according to the semi-official Iranian news agency Mehr News.
Could the blockade force a confrontation?
Prof Kumar says that the strategy “escalates a confrontation in one of the world’s most fragile chokepoints, where the US and global economy are far more exposed than Iran itself”.
Iran has threatened to attack US partners in the Gulf if what it calls “piracy” continues.
“It seems to be a tit-for-tat move by the US,” explains Dr Quilliam. “At best, if it remains benign, then it will prevent Iran from exporting its crude, but [it] will lead to an increase in the price of oil. In this scenario, the US aims to increase Iran’s economic pain and bring it back to the negotiating table. This move alone will not persuade the regime to reopen talks, as it has resisted sanctions for over 20 years.
“At worst, Iran will challenge the blockade, leading to renewed military confrontation and include new Iranian strikes against energy infrastructure in the Gulf states, notably Saudi Arabia and export facilities in Yanbu on the Red Sea. This will lead to an even bigger hike in oil prices.”
Source: independent.co.uk