The Strait of Hormuz isn’t completely closed as several daring ship captains have risked attacks from Iran to transport cargoes through the narrow Persian Gulf waterway, with some claiming to be Chinese.
Tanker traffic has largely come to a standstill since the U.S. and Israel launched a war against Iran, which has retaliated by lobbing missiles and drones at Gulf neighbors as well as the ships ferrying energy to destinations around the world.
About 20% of the world’s oil and liquid natural gas pass through the strait, and the sudden traffic halt has sent prices soaring. But that spike also promises a massive payday for any ships willing to make their deliveries. Freight rates have soared to record highs, and a very large crude carrier heading from the strait to China can earn about $500,000 in revenue per day.
Over the past week, at least 10 ships have changed their transponder signal to say “Chinese Owner,” “All Chinese Crew” or “Chinese Crew Onboard,” according to MarineTraffic data analyzed by the Financial Times.
For example, one ship called the Iron Maiden briefly changed its signal to say “China owner” as it scurried through the strait on Wednesday, according to the FT.
About half of China’s oil imports must traverse the strait, and 90% of Iran’s oil supply ends up in China, often via third countries to evade sanctions.
As a result, Tehran relies heavily on those shipments for revenue and is also sensitive to the perception that its military is preventing tankers from reaching its ally.
But “Chinese” isn’t the only identity being used by ships, which include container vessels and oil tankers. The FT pointed to an instance last weekend, when a fuel tanker called Bogazici crossed the strait while temporarily identifying itself as “Muslim Vsl Turkish.”
To help encourage shippers to get their cargoes out of the Gulf and ease global energy markets, President Donald Trump announced a $20 billion reinsurance program for oil tankers and other maritime traffic.
Analysts have pointed out that the threat of getting blown up by Iranian projectiles is a bigger obstacle than getting insurance coverage. So Trump has also said the U.S. Navy will escort tankers through the strait if necessary.
But Wall Street remains unconvinced. On a normal day, 60 tankers—and as many as 90—go through the Strait of Hormuz.
Leading up to the start of the war last weekend, the Navy had two aircraft carriers and 16 surface warships in the Middle East, marking its largest presence in the region since the Iraq war began in 2003.
According to the Center for Strategic and International Studies, the Navy’s fleet consists of 233 commissioned warships and 59 are support ships. But most are in port or in maintenance and training, with less than a fifth of the force at sea for operations. As of late February, just 49 Navy ships were at sea conducting operations.
Meanwhile, the U.S. and its Gulf allies have had trouble shooting down Iran’s Shahed drones, which have hit several major military targets.
“Trying to protect so many ships is a massive logistical undertaking,” Robin Brooks, a senior fellow at the Brookings Institution, wrote in a Substack note Friday. “All Iran needs to do is to sneak through a couple of drones to blow up one ship and we’re going from what is currently a very serious incident to a massive oil shock. In short, I don’t think US assurances of navy escorts are all that credible. There’s just way too many oil tankers that need protecting.”
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