The Strait of Hormuz reopens: But can the safety of ships be guaranteed? | | Narrator

US President Donald Trump was happy when he announced the first agreement with Iran to end the war that has caused the biggest crisis of modern energy in modern history – and has closed the Strait of Hormuz to the rest of the world.

“Ships of the World, start your engines. Let the fuel flow!” Trump wrote in his Social Truth column on Sunday.

Oil prices have fallen. But three days after the agreement was announced by Iran and the US, marine vehicles did not move through the narrow but very important road, the demonstrations followed by submarines.

Shipping and insurance companies seem to be taking a wait-and-see approach before deciding whether to go through the Strait of Hormuz, and the end of the fire, to fully settle.

So, what are the biggest challenges as the Strait of Hormuz reopens?

What is happening in Hormuz?

Before the war, between 120 and 140 ships passed through the strait every day, about half of them tankers carrying 20 million barrels of oil between them. Iran quickly shut down the issue after the US-Israeli bombing in late February, and the US resumed blocking Iranian ports a few weeks later.

Since the initial agreement was announced on Sunday, only seven ships have passed through, according to ship manager MarineTraffic. Among them were a few Iranian oil tankers that crossed the US border in the Strait of Hormuz – Iran’s “first irregular oil shipment in two months”, tanker tracker TankerTrackers said on Wednesday.

More than 550 ships are stranded on both sides of the river, waiting to cross Gulf waters.

Despite Trump’s insistence that the road is “open” to traffic, Iranian officials have said that any passage through it must be coordinated with Iran’s Islamic Revolutionary Guard Corps (IRGC) and follow a route close to Iran’s coast.

Why isn’t there more traffic?

Apart from the fear of mines in crisis, which the US says have now been removed, sailors are wary that violence could resume at any time.

An unprecedented exchange of missiles and weapons across the Gulf in recent weeks has heightened security concerns in the Strait of Hormuz. In addition, the US and Iran have attacked and fired on merchant ships in the waterway which is 33km (20 miles) wide at its narrowest point.

Last week, the US military attacked at least three ships, killing three Indian sailors in one attack.

Then, a day before the agreement was announced, US Central Command (CENTCOM) said its naval blockade had redirected 142 merchant ships that followed and blocked nine non-compliant ships.

Although talks on a final peace deal are set to begin following a ceremonial signing in Switzerland on Friday, concerns remain that trade deals could be caught in the crossfire.

“It will take more than political agreement before we see change, which is why we haven’t seen any change so far in Hormuz if we look at the AIS trackers,” said Haider Anjum, a business analyst at Jyske Bank, referring to the transponders ships use to transmit their position.

“Shippers need to see real security and long-term stability,” he told Al Jazeera. “We need to see a stable period without incidents where ship owners and insurers can consider the risk to be low enough.”

That could take four months, he said.

The most common concerns for shippers are:

Mines

The threat of underwater mining has worried many people in the Strait of Hormuz for some time.

At the start of the war, Iran threatened to dig a waterway, but has never confirmed whether it actually did so. When the IRGC first released a map of the safe ships it would allow to pass, it said it would avoid “possible” mines.

The US says the mines are a threat and has said it has targeted Iranian minelaying boats during the war.

On June 2, the Secretary of State of the United States, Marco Rubio, told the Senate Committee on Foreign Affairs that Iran “mined large parts of Hormuz – international waters”, without elaborating.

However, even the possibility of mines in the waterway is enough to stop the traffic, especially since there is no insurance company that can protect ships that are in such danger.

“Even with the reopening, the danger zone remains high. The biggest danger comes from mining,” Anjum said. “The establishment of a reliable and secure non-mining system, with a mine permit, is expected to take about two months.”

Nader Habibi, an Iranian-American economist, told Al Jazeera that crews of ships passing through the Strait of Hormuz “would remain worried about their safety for several weeks as negotiations continue on the unresolved issues between the US and Iran”, adding that there would be a risk of “meeting with unresolved mines”.

Fees

Historically, navigation through the Strait of Hormuz, which runs through the waters of Iran and Oman, was free. Since the start of the war, Tehran has said that this will not continue.

Under international law, charges cannot be taken for natural disasters such as Hormuz, even if they are not in foreign waters. However, it is legal for neighboring countries to charge fees for “services” provided in transit, such as insurance or port.

The US and GCC countries have opposed the imposition of any “tolls” on voyages, which they say violate the right to navigate the high seas. Iran insists that it is not planning to pay for transit, but a fee for coordinating safe transit.

They have the right to do so, says Tehran, because the problem is not in international waters. It established the Persian Gulf Strait Authority in May to oversee such activities in the Strait of Hormuz.

“The U.S. can resist and oppose the persecution of Iran.” However, it may be doubtful to start a debate on this matter, “said Habibi. “Establishing an open process is very important even if it is necessary to look for another way in this matter.”

In the long run, however, Habibi said that “it is unlikely that the GCC countries and the US will allow Iran to import any money”. He added that the US may decide to order ships that pay “reparations” to Iran.

Some do not believe Iran will give up some form of control over the crisis, however, because it is the most powerful tactic it has against the US.

Insurance

Reluctance of insurance companies to underwrite war risk premiums – which were raised to the point of being unaffordable or eliminated entirely due to the Hormuz shipment at the start of the US-Iran war – is another major obstacle to resuming shipping through the route.

“Even if there is no strike, lack of insurance can stop train movement,” said Anjum.

“Doubts about the sustainability of the peace deal will cause several problems for the shipping industry, and insurance prices are expected to be high,” said Habibi, an economist.

Anjum, of Denmark’s Jyske Bank, told Al Jazeera that interest rates have dropped from their peak amid the violence, but still “remain high and could remain in trouble for several weeks.”

He said that before the war the risk was about 0.25 percent of the value of a single shipment but rose to 5 percent during the war, depending on the country of origin of the ship.

Now, he said, wages are back to 1 to 3 percent.

Arsenio Dominguez, head of the UN maritime agency, on Monday welcomed the agreement to reopen the waterway as “an important step in restoring security in this important maritime route for sailors and ships”.

“However, its implementation will require time to ensure that all safety and security guarantees are in place,” he said.

Habibi said that, despite these dangerous conditions, “more ships are expected to pass because both sides have the motivation to open the channel.”

The threat in the Strait of Hormuz, Anjum said, has changed from a complete closure of the waterway “to a complex, highly protected area with mines on the ground, missiles on the surface, and insurance barriers in between”.