Why oil tankers remain hesitant to travel the Strait of Hormuz, according to experts
An Iranian closure has choked the global oil supply, driving up gas prices.
Gasoline prices have marched higher since the outbreak of the U.S.-Israeli war with Iran, straining budgets and testing patience as the conflict stretches into its third week.
The gasoline shock is due to a near-closure of the Strait of Hormuz, a critical, narrow waterway off the southern coast of Iran that facilitates shipping for about 20% of oil consumed worldwide.
Iran has attacked several oil tankers since the war began in late February, halting nearly all shipping traffic. The supply shock has sent the price of oil surging.
President Donald Trump in recent days called on a number of countries, including the United Kingdom and Australia, to help open the strait. He appeared to abandon the plan on Tuesday, however, saying on social media "we no longer 'need,' or desire, the NATO Countries' assistance -- WE NEVER DID! Likewise, Japan, Australia, or South Korea."
The short-lived effort to build an international coalition came days after Trump vowed a U.S. naval escort for oil tankers if needed. As recently as last week, Trump urged oil tankers holding at the Strait of Hormuz to "show some guts" and sail through the waterway.
Alternatives exist for the transport of some of the oil that usually passes through the strait, but they cannot address a large share of the lost output.
Here's what to know about why most oil ships have opted against traveling through the Strait of Hormuz, according to oil industry analysts.
Iranian attacks pose a threat for oil tankers
The root cause of the tanker stoppage outside the strait, analysts said, is straightforward: Shippers consider the likelihood of an Iranian attack too high.
Tensions escalated last week after the Iranian military claimed it struck an oil tanker in the Persian Gulf, one of three commercial ships attacked in a single day near the Strait of Hormuz.
The Safesea Vishnu, sailing under the Marshall Islands flag, was one of two oil tankers struck on Thursday. The Iranian navy claimed responsibility for the attack.
In his first purported message, Mojtaba Khamenei, the newly installed supreme leader of Iran, last week addressed the importance of the Strait of Hormuz.
In a message read on Iranian state television, Khamenei was quoted as saying that the closure of the shipping route must be sustained as a "tool to pressure the enemy."
Some oil tankers have traveled through the Strait since the war began, mostly ships carrying Iranian oil bound for China. While other ships can still attempt passage through the strait, the threat of Iranian attack remains an unknown that must be weighed by decision makers, Jean-Paul Rodrigue, a professor of maritime business administration at Texas A&M University-Galveston, told ABC News.
"The strait isn't closed -- Iran can't close it," Rodrigue said. "They can project a risk of interdiction. Nobody knows exactly what those risks truly are."
"We're in the 'find out' phase," Rodrigue added. "Uncertainty is very high."
Eugene Gholz, a professor of political science at the University of Notre Dame who studies national security and economic policy, described the halt of tanker traffic as a "pause" meant to offer shipping firms an opportunity to assess the risk of navigating the strait.
"Whenever the security situation changes in shipping lanes, shippers adapt to it. They think about it and make appropriate choices. That often involves pausing operations," Gholz said.
Why insurance hasn't fixed the problem
Insurance, the typical market mechanism for navigating risk, has proven largely ineffective for loosening traffic in the strait, some analysts said.
In a post on social media days after the war began, Trump ordered the federal government to provide "political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf."
Insurance remains available to shippers seeking passage through the strait, albeit at significantly elevated prices, Bloomberg reported on Monday.
Although insurance rates have been "sorted out," Rodrigue said, he noted that the overwhelming majority of ships are still reluctant to pass through the strait.
Rob Handfield, a professor of operations and supply-chain management at North Carolina State University, said a successful attack on an oil ship could result in "billions of dollars in damage."
"The oil could ignite, the ship could blow up -- it's a huge risk," Handfield added. "Nobody wants to risk that."
'Incentive to delay'
Security measures and oil prices remain in flux, meaning shippers' calculations about attempting passage may change. The value of the cargo, after all, far outweighs the cost of insurance, especially as oil prices continue to rise, Gholz said -- a dynamic that could prove to be an enticing financial incentive for tankers.
"At some point, they'll decide the financial incentive is high and the risk is low enough," Gholz said.
Last week, U.S. Energy Secretary Chris Wright told CNBC that the Pentagon is "working" on a naval escort for oil tankers, but the military is "not ready yet."
"It'll happen relatively soon but it can't happen now," Wright said, adding that the operation would take place in "weeks, not months."
The notion of a U.S. naval escorts for oil tankers could alleviate the safety-related fears of shipping companies and crews, but the scale and complexity of the operation could pose challenges, some analysts previously told ABC News.
The promise of a possible improvement in the security situation in the Strait of Hormuz may provide tankers "incentive to delay," Gholz said, since they could anticipate fewer risks in the near term.
"If you were a shipping company or a captain thinking about this, why would you go today if you waited a few more days and you might have something that would feel more secure?" Gholz added.
Related Topics
Popular Reads
ABC News Live