TThe recent signing of the peace agreement between the United States and Iran has proven to be as fragile as the restoration of the Strait of Hormuz “business as usual.” In its latest weekly report, Gibson Shipbroker said, “After more than three months of turmoil, the likelihood of the Iranian conflict approaching its end appears higher than ever. The Memorandum of Understanding between Iran and the United States, which was signed twice over the past week, sets out fourteen points that chart a path toward normalization. In short, the Memorandum of Understanding stipulates an end to hostilities between all parties, including Israel and Lebanon, along with the lifting of the US and Iranian blockade, which will take the latter into account and Iran must consider removing Technical obstacles and mines, along with significant funding and sanctions relief, will in turn refrain from seeking a nuclear weapon, and a comprehensive agreement will be negotiated within 60 days, a period that can be extended, with the final agreement stipulated through a binding UN Security Council resolution.
According to Gibson, “Early indications are that both sides are respecting the terms. We have seen several Iranian VLCCs and Suezmax tankers transit the US blockade this week with their Automatic Identification System activated, suggesting that Washington is holding up its side of the bargain. Likewise, transits through the Strait of Hormuz are increasing, although a return to pre-war volumes within 30 days may be difficult to achieve. However, cargo availability currently exceeds owners’ willingness to transit the SOH, making Concerns at the moment Crossings to Hormuz are expected to gradually increase, subject to continued improvement in the security situation, and premiums should ease in line However, freight premiums for transits to the Middle East Gulf are likely to remain volatile, and we have observed vessels increasingly positioned close to the MEG in recent weeks, particularly VLCCs and LR2s, which are the sectors most dependent on MEG volumes, although it may take two to three months before vessel supply fully normalizes “.
“With regard to oil supplies, the IEA is optimistic that crude oil production in the Middle East can recover quickly as the security situation returns. Saudi Arabia and the UAE have significant spare capacity and could raise production to offset slower recoveries in countries such as Iraq and Kuwait. With the UAE now freed from OPEC quotas, the country may look to expand exports quickly, while Saudi Arabia may continue to rely on Yanbu to limit any bottlenecks at loading terminals in the Gulf. The quota policy remains OPEC+ is uncertain, however the group has already raised quotas “by about 800,000 barrels per day between April and July,” the shipbroker said.
However, the ‘product recovery will lag. The damage to Middle Eastern refineries means that operating rates are unlikely to return to pre-war levels until 2027 at the earliest, while Asian refinery operation will only recover once feedstock supplies improve significantly, most likely in the fourth quarter of 2026. Refiners may also find themselves competing with government inventory builds, and refinery exports may be constrained as operators seek to rebuild CPP inventories to normal levels. Or divert supplies to government storage and are therefore unlikely to fully recover until later in 2027, as crude oil volumes lag significantly. The US Treasury has already issued a waiver for exports of Iranian oil and products, effective until all sanctions facing Iran are lifted. However, it remains unclear whether the sanctions relief will be broad enough to allow major buyers to return to Iranian oil. “Vessels currently engaged in Iranian trade will be further diminished, and asset prices may be exposed,” Gibson noted. “Old carriers are under pressure as revenue generation opportunities narrow.”
Source: Gibson Shipbrokers Limited
The shipbroker concluded: “In general, the agreement appears fragile, and a return to hostilities cannot be ruled out. Israel has continued its military operations in Lebanon, where Iran has accused it of violating the terms of the memorandum of understanding 84 times since the signing. Time will tell whether this represents the true beginning of the end, or just another pause.”
Nikos Rousanoglou, Global Hellenic Shipping News
