Hormuz Ship Traffic Drops Sharply
Ship traffic through the Strait of Hormuz has fallen to roughly one-quarter of its prewar level, with the number of vessels transiting the strait declining by about 75% from before the Iran war, as detailed in a report from the United Kingdom Maritime Trade Operations (UKMTO).
This strait is a vital conduit for roughly 20% of the world’s crude oil and liquefied natural gas (LNG) shipments.
On October 12, South Korean shipping companies saw a broad increase in their stock prices during early trading, with STX Green Logis climbing 5.99% to 2,300 won, equivalent to about $1.72, compared to the previous day’s close.
Pan Ocean increased by 4.98%, while Heung-A Shipping and HMM both rose by 3.85%, and Korea Line saw a 2.96% gain.
This surge in shipping stocks is fueled by anticipation of higher freight rates due to heightened instability in the Middle East, where an unidentified projectile hit a tanker in the Strait of Hormuz, and Yemen’s Houthi rebels targeted Saudi Arabia’s energy facilities.
These events have led to substantial increases in vessel rerouting and delays as geopolitical tensions escalate, diminishing effective shipping capacity and boosting demand for long-distance transport from alternative sources like the United States and Brazil.
Lee Ji-ni, a researcher at Daishin Securities, observed that the number of tankers ready for deployment has decreased due to increased transshipment and rerouting. Lee also mentioned that the growth in ton-miles for crude oil shipments from the United States and Brazil could support raised freight rates into the following year.
Some market analysts warn that it remains unclear whether geopolitical tensions will directly improve earnings, as rerouting also raises fuel consumption and operational expenses. They recommend that stakeholders closely track freight rates and cargo volumes by route to accurately identify potential beneficiaries.
