Key Takeaways:
The world's largest shipowner organization said the US-Iran peace deal lacks enough detail for shipping lines to safely resume transit through the Strait of Hormuz.
The Baltic International Maritime Council warned Monday that shipping through the Strait of Hormuz cannot fully resume until both sides provide credible security guarantees, as key details of the US-Iran peace agreement remain unresolved.
"Credible security assurances from both parties are required before shipping traffic can fully return to pre-conflict levels," said Jakob Larsen, chief safety and security officer at BIMCO, the world's largest shipowner organization based in Bagsvaerd, Denmark.
The warning came hours after President Donald Trump and Iran announced a surprise agreement to end months of hostilities, reopening the waterway through which about a fifth of the world's oil flows. Global crude prices tumbled to their lowest levels since early March on the news, though analysts cautioned that restoring Gulf energy production could take months or years. Some infrastructure sustained damage from drone attacks, and shipping companies and insurers may still consider the strait unsafe for passage.
The uncertainty threatens to sustain elevated risk premiums on crude oil and shipping insurance, potentially keeping oil prices elevated by more than 3 percent and disrupting global supply chains for petroleum and liquefied natural gas. A formal signing ceremony is scheduled for June 19 in Switzerland, followed by a 60-day negotiation period for a more comprehensive final agreement.
Deal Details Remain Hazy
The memorandum of understanding, mediated by Pakistani Prime Minister Shehbaz Sharif with support from Qatar, Saudi Arabia and Turkiye, calls for the reopening of the strait within 30 days under "Iranian arrangements," according to Iran's Mehr news agency. The US would release as much as $24 billion in frozen Iranian assets during the 60-day negotiation period, Mehr reported, though the Trump administration did not immediately confirm those terms.
Trump said on Truth Social that he "fully authorized the toll free opening of the Strait of Hormuz" and the "immediate removal of the United States Naval blockade," though he later added that the opening was contingent upon a deal signing scheduled for Friday and would be "for purposes of mine removal." The leaders of the UK, France, Germany and Italy — a grouping called the E4 — emphasized that the reopening must be unconditional with unrestricted freedom of navigation.
Nuclear Talks and Regional Complications
The fate of Iran's nuclear program, a key rationale Trump gave for launching the war, remains unresolved. Senior Pakistani officials told the Associated Press that nuclear talks would continue over the next 60 days. Trump told the New York Times that if Tehran failed to reach a nuclear deal, it could face fresh US military strikes. Iran has long maintained its program is peaceful and has not publicly committed to giving up enriched uranium believed buried under three nuclear sites damaged by US strikes last year.
The agreement's scope also remains contested. Iran's deputy foreign minister said the deal covers all fronts including Lebanon, and mediator Sharif confirmed the "permanent termination of military operations on all fronts, including in Lebanon." But Trump made no mention of Lebanon in his initial announcements, potentially complicating relations with Israeli Prime Minister Benjamin Netanyahu, who has continued military operations against Hezbollah and was not included in the Iran peace negotiations.
This article is for informational purposes only and does not constitute investment advice.
