The chances of the Strait of Hormuz reopening soon are becoming slimmer, as negotiations between the United States and Iran have devolved into both sides demanding reparations.
For base oil cargoes, the prolonged disruption has created alternative routing and delivery problems. Some base oil supplies have moved through neighboring countries and ports outside the Gulf, according to Berlin-based trader DYM Resources, which estimates that trucking and demurrage have increased shipping costs by two to three times and added up to two months to transit times.
While some transit activity through the strait has resumed, the shipping situation remains opaque. At the end of last week, about 70 vessels were reported by the U.S. Naval Institute to be trapped in the Persian Gulf, including 29 tankers. Some ships entered the Gulf during an earlier brief period of increased transit activity and remain there. Tanker movements through Hormuz are also at reduced levels.
“All this bluster, claims and counterclaims are leading to greater uncertainty,” writes Ray Masson, Lubes’n’Greases EMEA base oil pricing commentator, in this week’s Base Oil Pricing Report, “with crude and gas markets reacting with firmer prices early this week.”
Base oil cargoes remain aboard vessels at anchorages inside and outside the Gulf, with some ships having waited for as long as six months, Masson explains. Many vessels that initially remained at anchor during the war have since been diverted to alternative discharge ports willing to receive their cargoes on a distress basis. A smaller number have stayed at anchor in the Gulf of Oman, while other ships remain inside the Gulf with limited options for leaving.