Hormuz vessel traffic falls to pre-MoU levels as US-Iran tensions escalate

Renewed tensions between the United States and Iran have sharply reduced vessel traffic through the Strait of Hormuz, with ship movements falling to their lowest level in nearly a month.

According to vessel tracking data from Kpler, only 14 vessels crossed the Strait of Hormuz on Sunday (July 12), down from 24 on July 11 and 19 on July 10. Data from S&P Global showed that the last time traffic fell below this level was on June 14, three days before the US and Iran signed the June 17 peace agreement.

The slowdown has renewed concerns over global energy supplies, as roughly 20 per cent of the world's oil passes through the Strait of Hormuz. Brent crude futures rose about 4 per cent to around $80 per barrel on Monday amid fears of tighter energy flows.

Security concerns weigh on shipping

Maritime traffic had recovered after the June MoU, with daily vessel crossings briefly crossing 90 on June 24 before stabilising at around 40 to 50 ships a day. However, that remained well below the pre-war average of nearly 140 daily transits.

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The latest decline follows a fresh escalation in the Gulf after several vessels are attacked in recent days while sailing outside shipping routes authorised by Iran.

The US responded by striking Iranian military locations, while Tehran expanded attacks on US-linked assets across West Asia. Iran has also announced the closure of the Strait of Hormuz to commercial shipping, further increasing uncertainty for the maritime industry.

Before the conflict began in late February, commercial vessels navigated the waterway freely. Since then, Iran has asserted greater control over parts of the strait, requiring ships to use designated routes and obtain permission before transiting.

The US and its allies, meanwhile, have encouraged vessels to use routes closer to Omani waters, creating conflicting navigation guidance.

An Indian Express report, citing industry data, said that ships passing through the strait are increasingly following Iran-designated routes, while more vessels are switching off their Automatic Identification System (AIS) transponders to reduce their visibility during transit.

India faces rising energy risks

The renewed disruption has once again highlighted India's vulnerability to developments in the Gulf. India's import of around 40 per cent of its crude oil, 60 per cent of LNG and nearly 90 per cent of LPG pass through the Hormuz, making uninterrupted shipping critical for the country's energy security.

Higher crude prices also threaten India's import bill. According to the report, the country imports around 1.8-2 billion barrels of crude oil annually, meaning every $1-per-barrel increase in oil prices adds up to $2 billion to its annual import costs.

Economists have also warned that sustained high oil prices could widen India's current account deficit and increase inflationary pressures if the conflict continues.