Ship traffic through the Strait of Hormuz dropped to a five-day average of just 13 vessels on Tuesday, hovering near a three-month low as negotiations between Washington and Tehran stall over shipping route protections. Energy Secretary Chris Wright reported that tankers continue moving with U.S. military assistance.
Strait of Hormuz Traffic Dips Near Three-Month Low
Vessel transits through the critical Middle East oil export corridor sat at a five-day average of around 13 vessels, nearly matching the lowest levels seen since May 12, according to an analysis of data provided by trade intelligence firm CNBC. The count includes cargo vessels and oil tankers alike, reflecting a sharp contraction in commercial activity.
This current volume sits roughly 90% below the daily average of 130 ships that passed through the strait prior to the U.S. and Israeli strikes against Iran on Feb. 28. Despite the severe maritime slowdown, Energy Secretary Chris Wright noted that total oil exports through Hormuz have reached a seven-day average of nearly 9 million barrels per day as tankers utilize U.S. military assistance.
Total oil exports from Gulf states average about 15 million barrels per day when accounting for pipelines, according to the energy secretary. Before the conflict, approximately 20 million barrels per day of crude oil and products moved through the passage.
“Many private businesses undercount the number of ships leaving the Strait of Hormuz due to ships moving covertly through the waterway.”
Chris Wright, Energy Secretary
Diplomatic Stalling and the Collapse of Previous Interim Pacts
The stagnation in commercial transit follows the breakdown of earlier diplomatic efforts. The U.S. and Iran previously signed an interim deal on June 17 aimed at reopening the waterway, which triggered a surge in ship crossings to a five-day average of about 60 by June 26.
That agreement subsequently collapsed as Washington and Tehran clashed over specific shipping routes left undefined in the text. Iran targeted tankers utilizing the U.S.-protected route along Oman’s coast, prompting the Trump administration to launch more than a dozen waves of strikes and reinstate its naval blockade.
Iran’s top national security official, Mohsen Rezaei, maintained that the strait will not open fully until Washington agrees to Tehran’s demands, according to state media. Just a week prior, Treasury Secretary Scott Bessent told CNBC that a deal could arrive soon to restore freedom of movement, driving a temporary oil sell-off before talks stalled again.
Omani-Backed Proposals and New Regional Navigation Plans
Against the backdrop of stalled bilateral talks, alternative diplomatic channels are emerging. Omani authorities presented Tehran with a navigation plan backed by Gulf states during meetings, modeling a proposed framework on the Strait of Malacca.
The proposal suggests that transit fees be voluntary and directed toward environmental protection. Negotiators from Oman and Iran are also discussing the reopening of the strait’s largely unused middle passage, though potential obstacles remain, including the need to remove Iranian sea mines before commercial vessels can return safely.
President Donald Trump has pivoted back to diplomatic messaging, though market participants remain skeptical about concrete outcomes.
Hedge Funds Re-enter Crude Futures as Chokepoint Risks Persist
The persistent volatility around Middle East chokepoints has rapidly altered financial positioning. The initial signing of the U.S.-Iran Memorandum of Understanding sparked heavy hedge fund sell-offs, but the ongoing closures of the Strait of Hormuz and the Bab el-Mandeb strait have revived bullish sentiment among institutional investors.
Net positions held by hedge funds and money managers in ICE Brent futures and options rebounded to the equivalent of more than 192 million barrels—marking a two-month high in the week ending July 21. Meanwhile, positioning in Nymex WTI remained relatively stagnant through June and July, indicating that speculators prefer contracts avoiding physical delivery.
ICE Brent is trading around $87 per barrel following recent market swings. Lower trading activity in crude futures, with open interest down 11% year-over-year, continues to amplify overall price amplitudes.
Broader Energy Market Shifts and Supply Constraints
The energy sector is absorbing multiple regional supply disruptions alongside the Hormuz blockade. In Saudi Arabia, Saudi Aramco’s 400,000 barrel-per-day Jazan refinery suffered significant damage from Houthi missile strikes over the weekend, leaving storage tanks burning for three days.
Simultaneously, OPEC+ is expected to halt its gradual output increases after September, keeping production steady through the remainder of 2026 to buy time for negotiations over contentious national quotas for 2027.
China’s seaborne crude imports are recovering slightly to an estimated 7.8 million barrels per day in July, climbing from a 10-year low of 6.2 million barrels per day the prior month as stranded Gulf cargoes finally arrive and Russian flows increase by 10%. As regional chokepoints remain heavily restricted, global markets watch whether diplomatic proposals from Oman can break the maritime stalemate.
