US and Iranian officials arrived in Switzerland on Sunday June 21st for talks.
Continuing clashes between Israel and Hezbollah, despite frequent announcements of a ceasefire, led to Iran stating that the Strait of Hormuz had been closed. The US, meanwhile, said that it remained open.
The physical evidence from AIS and specialist company observations was that the Strait had indeed remained open in the sense that traffic was still flowing through, as it had on Friday and Saturday, but western interests were holding off.
Windward AI reported about 12 transits on June 21st, none of them European or “neutral” tonnage. This compared with more than 21 transits on Saturday. “The current traffic profile: dark, sanctioned, Iranian-linked, resembling the late-blockade baseline more than a functioning open strait”, said Windward.
US vice-president JD Vance is attending the talks. This is significant because (a) he is a senior figure in the administration and (b) he has been the US politician in the administration most critical of Israel’s actions in Lebanon since the signing of the MoU between Iran and the US.
The US said that it hoped for progress on “the nuclear issue” and Lebanon, while Tehran said that the talks were about both sides fulfilling their promises in the MoU.
Vance was joined at the Bürgenstock mountaintop resort by US President Donald Trump’s son-in-law Jared Kushner and special envoy Steve Witkoff.
For the Iranians, parliamentary speaker Mohammad Bagher Ghalibaf and Foreign Minister Abbas Araghchi arrived in Switzerland late on Saturday.
The delegations were joined by Pakistan’s Prime Minister Shehbaz Sharif and the head of the country’s armed forces, Field Marshal Asim Munir.
EARLIER
At least four tankers carrying crude oil, oil products and LPG had entered the strait on Friday, heading for Iraqi Gulf ports, according to MarineTraffic data. A Japanese-owned crude tanker exited the strait and was bound for Japan.
Separately, Indian-flagged crude supertankers Desh Vibhor (IMO 9610298) and Desh Vaibhav (IMO 9297498) had commenced voyages through the strait to India, although MarineTraffic has the first vessel seven days ago being off the west coast of Africa. As the Desh Vibor had departed Al Rams in the UAE on March 30th, and was listing its destination as “Indian Ship/crew”, this Atlantic Ocean location looks unlikely.
There were 25 commercial crossings through Hormuz on June 18th, which was the highest single-day count since April 18th.
Kuwait Petroleum Corp is offering crude for July delivery via a tender, a document showed on Friday, after it lifted force majeure and announced plans to increase output, while Abu Dhabi National Oil Company (ADNOC) issued its fourth tender this month.
The US Navy-led Joint Maritime Information Centre (JMIC) said late on Thursday that “mariners should be advised of the existence of mines and expect naval presence as clearance operations continue”. It advised vessels to avoid the Traffic Separation Scheme because of mine risks.
Ship broker Braemar said in a note that “risks range from the danger of mines … to that of getting stuck in the Mideast Gulf should tempers flare and Iran block Hormuz once again”.
On Friday the JMIC reduced the risk of transiting the Strait to Moderate, down from Severe only the day before.
Switzerland said US-Iran talks on a broader peace pact would not take place on Friday. US Vice President JD Vance cancelled a planned visit. There was no physical signing, with the US saying that it was not necessary as an electronic signing had already taken place. However, talks in Switzerland were scheduled to recommence on Saturday evening.
UK-based maritime security firm Ambrey said that on Thursday Iranian forces had ordered a Hong Kong-flagged tanker and a Saint Kitts and Nevis-flagged bulk carrier to turn back on Thursday.
Iran’s Persian Gulf Strait Authority said “no vessel is permitted to pass through the Strait of Hormuz without a valid passage permit issued by the PGSA”. The PGSA, which describes itself as the sole body authorised to issue permits, also said that it was reserving the right to introduce insurance fees, requiring shipowners to obtain and renew coverage.
Meanwhile, the US-based hawkish advocacy body United Against Nuclear Iran, which monitors Iran-related tanker traffic, said that a flotilla of 10 laden Iranian-flagged supertankers carrying close to 20m barrels of oil was sailing from Iran’s Chabahar anchorage in the Gulf of Oman and heading to Asia, probably with the ultimate destination of the independent “teapot” refineries in China. UANI senior advisor Charlie Brown said that “there is apparently no longer the hot potato issue of unilateral American sanctions”.
The diplomatic underpinning of the MoU, noted for its lack of specificity in places, was already showing signs of strain. Industry bodies are warning shipowners to hold back until passage can be guaranteed as safe, rather than “permitted”.
The MOU, brokered by Pakistan and signed late Wednesday, established a 60-day negotiating window covering a broad portfolio of issues including Iran’s nuclear programme. Within hours of the electronic signing Iranian state outlet Fars reported that Tehran had placed that core element on hold. That was seen as the likely reason for VP Vance not going to Switzerland. Tehran’s reasoning is that it had secured a commitment that the ceasefire would encompass a halt to all hostilities, including Israeli strikes against Hezbollah in Lebanon. Israel continued operations on Thursday with attacks on Kfar Tebnit and Zabadin. Iran said that these strikes invalidated the entire MoU.
Fortunately for the MoU Israel pulled back from the brink and agreed to a ceasefire in Lebanon on Friday.
Iran’s Supreme National Security Council confirmed that the PGSA would issue rapid authorizations for vessels wishing to transit in line with the MoU, with mine clearance measures to follow. Ships were advised to adhere to the paths and timings allocated by the authority.
BIMCO issued a detailed caution on Thursday. “Iran and the US have now agreed to permit transits through the Strait of Hormuz, but significant safety and security risks still persist,” said Jakob Larsen, the organisation’s chief safety and security officer. He added that “the central part of the Strait is mined and un-navigable, and only the inshore traffic zones close to Oman and Iran are reportedly free of mines”.
Larsen has also said that the MOU itself raised more questions than it provided answers. He noted gaps around safe routes, traffic separation, sequencing of vessels departing the Gulf, and emergency response procedures.
BIMCO is calling for an international coordination body to be established to manage the transit process. Meanwhile it is encouraging owners to wait for its direction rather than attempt passage independently.
One concern is “serious risks associated with an uncoordinated mass transit through the narrow inshore traffic zones”, he said.
BIMCO’s chief shipping analyst Niels Rasmussen offered cautious optimism on the commercial outlook. More than 100 laden tankers and nearly 100 in ballast were currently trapped in the Persian Gulf. “Within a couple of months, shipping services could return to pre-war levels,” he said.
The World Shipping Council (WSC), liner shipping’s lobby group, welcomed the agreement, but also said that paper assurances were not enough. WSC president and CEO Joe Kramek said that “the immediate priority is safe passage for the seafarers and ships still stranded in the area. That will require coordination between states, the IMO and industry, backed by the necessary safety and security guarantees”.
Braemar is estimating that, even in an optimistic scenario where Middle East crude exports rose by 8m barrels per day over the coming months, the VLCC market might not see the rate surge some are anticipating. The reactivation of idle tonnage, including some 54 VLCCs already waiting near the Gulf, would absorb a portion of the demand recovery, while the loss of urgency premium that has kept rates elevated during the closure could send freight levels back toward where they were before the conflict began. A so-called “fear premium” for Gulf-loading routes, however, was expected by Braemar to persist for some months.
Braemar shared with several other stakeholders the fear that the 60-day deadline could become a rolling target, maintaining a semi-permanent threat of reclosure.
2015-built, India-flagged, 165,319 gt Desh Vibor is owned and managed by SCI, the Shipping Corporation of India, of Mumbai, India. It is entered with Gard P&I on behalf of SCI. It is listed as departing Al Rams, UAE, on March 30th, with a destination of Indian Ship/crew.
2005-built, India-flagged, 161,202 gt Desh Vaibhav is owned and managed by SCI, the Shipping Corporation of India, of Mumbai, India. It is entered with Gard P&I on behalf of SCI.
As of June 19th the 333m x 60m Desh Vaibhav was underway in the Gulf Oman, listing its destination as “Indian ship/crew”.