Sea V and Hestia U-Turns Show Why Hormuz Shipping Is Still Too Risky

War-risk insurance, waiting time, diversions and financing costs add to the headline freight bill. As a result, even a tanker that can physically pass may not have an economically viable voyage unless the cargo owner accepts a much higher risk premium.

Traffic has collapsed, but the strait is not simply “open” or “closed”

The available data points to a severe reduction rather than a single, uncontested picture of total closure. Kpler data cited by Reuters put crude and refined-product flows at about 18 million barrels per day before the war, falling to 4.8 million b/d in July and averaging roughly 2 million b/d in August.

Vessel movements show the same deterioration. Only three commodity vessels crossed on July 16 after renewed attacks and a U.S. blockade, while five crossed on one later Saturday and none were recorded the following Sunday. Other reports have recorded small increases, including nine vessels on one August day, but that remained below the month’s average.

These figures are difficult to reconcile with absolute claims that no oil is leaving the Gulf. Some ships may be escorted, selectively permitted or operating with transponders disabled. A U.S. Energy Department statement also claimed that 8.5 million barrels crossed on one Sunday with military assistance, illustrating how official estimates can diverge from publicly visible tracking data.

The safest conclusion is narrower: Hormuz is functioning at a fraction of normal capacity, and the observable traffic does not settle every question about hidden or assisted movements.

Iran’s leverage over passage

The crisis has turned shipping access into a contest over who can define a safe route. Reporting has described competing Iranian-managed and U.S.-protected corridors, with vessels sometimes hugging Oman’s coast and others using routes closer to Iran.

Iran’s proposed framework would also restrict some traffic. An Iranian parliamentary plan included provisions to bar U.S., Israeli and other vessels deemed hostile, while Tehran reportedly sought fees of 5% to 7% of cargo value. Oman was discussing a fee of about 3%, whereas Washington wanted no transit fee.

That amounts to more than a temporary navigation rule. It would give Iran practical discretion over which ships enter the Gulf and under what conditions, even if the arrangement were formally mediated by Oman. The United States has opposed Iranian control of the waterway.

Why an Iran-Oman deal would not immediately restore normal traffic

An Oman-mediated agreement could create a channel for limited passage, but several obstacles remain. Reuters reported that industry sources considered the proposed arrangement difficult to implement because of U.S. sanctions and restrictive insurance clauses affecting payments.

There is also a credibility problem. A June memorandum described Iranian “best efforts” to arrange safe passage without charge for 60 days, while leaving the waterway’s longer-term administration to be determined through consultation with Oman and other Gulf states. A short-term promise is not the same as a durable security regime accepted by shipowners, insurers and governments.

For operators, the key question is not only whether a vessel is allowed through today. It is whether the same route, escort arrangement, fee structure and protection will still apply when the vessel returns—or if the political situation changes during the voyage.

What the U-turns say about normalization

The Sea V and Hestia reversals do not prove that Iran directly targeted those ships. They do show that the perceived risk remains high enough to affect decisions by vessels with Chinese links, even as governments debate how to reopen the route. The movements came amid stalled U.S.-Iran diplomacy, recent tanker attacks and renewed pressure on Tehran.

Normalization therefore looks distant rather than imminent. A meaningful recovery would require more than isolated passages: it would need a predictable route, enforceable guarantees, workable insurance, clarity over fees and agreement on whether Iran, the United States, Oman or a broader regional mechanism controls access.

Until those conditions exist, Hormuz is best understood as selectively passable but commercially unreliable. That distinction explains why tankers continue to move while others turn around—and why oil transport costs can remain elevated even when the strait is not completely empty.