Hormuz traffic slumps as Iran and US step up attacks

THE US launched fresh strikes against Iran on Thursday (Jul 16) as hostilities across the Middle East continued to escalate and shipping traffic slumped in the critical Strait of Hormuz.

The new US attacks in a campaign that has gone on for about a week began at 2 pm ET (2 am on Friday in Singapore), according to Central Command, with US forces aiming to “further degrade Iranian military capabilities.” They followed earlier strikes that hit an oil tanker near Iran’s main export terminal.

Iran responded by attacking US bases in Kuwait, Jordan and Bahrain. The Kuwaiti Armed Forces said they intercepted 32 Iranian drones targeting “vital” institutions, with falling debris damaging residential areas.

Qatar, which has acted as a mediator in peace talks between Washington and Teheran, reported in a post on X that its armed forces intercepted missiles that targeted the state.

The Wall Street Journal reported that US forces struck multiple bridges to cut supply routes to an Iranian port city and naval base used to support attacks on ships in the Strait of Hormuz, citing an unnamed senior US official. The Associated Press later reported the US expanded its air campaign early on Friday by striking additional bridges.

Global benchmark Brent rose towards US$85, on track for a weekly gain of almost 12 per cent as the exchange of attacks raised concerns about supplies.

Teheran has not backed down in the face of US President Donald Trump’s warning that he will escalate military strikes – including against Iranian power plants and bridges – until the Islamic Republic reopens the Strait of Hormuz, now the conflict’s focal point.

If the US does target Iranian infrastructure, “everything that has remained intact so far due to Iran’s nobility will be smashed to pieces – that is, all the infrastructure in the region,” state-run Islamic Republic News Agency cited a spokesman for the country’s central military command as saying on Thursday.

Iran has also asked its Houthi allies in Yemen to close the Red Sea oil route if the US strikes Iran’s power network, Reuters reported, citing people familiar with the matter.

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“As long as the United States does not accept the Iranian legal system, this strait will remain closed,” a spokesman for Iran’s army said, according to a report from the semi-official Iranian Students’ News Agency. That was likely a reference to Teheran’s demand that ships seek its permission before sailing through Hormuz and abide by its rules, including the imposition of any service fees.

Seven-day moving average of crude oil flows falls

Observable commercial traffic through the strait was sparse, with transits largely limited to Iran-linked vessels using the northern route approved by Teheran, ship-tracking data compiled by Bloomberg show. Even so, evidence continues to indicate that some oil cargoes are crossing without broadcasting their location.

Two supertankers carrying Saudi and Iraqi crude reappeared off Oman late on Wednesday after going dark on tracking systems in the Persian Gulf over the Jul 11-12 weekend, indicating they likely completed the Hormuz passage earlier this week. Some Iranian tankers also changed course after the US resumed blockading its ships again this week.

The slowdown has pushed the seven-day moving average of crude oil flows, including Iranian supplies, through Wednesday down to about 5.5 million barrels a day, from around 9.4 million barrels a day the previous week, according to Bloomberg calculations based on vessel-tracking data and information from Kpler and Vortexa.

The US is increasingly frustrated with Iran’s willingness and ability to attack vessels in the Strait of Hormuz, a vital route for oil and liquefied natural gas supplies from Saudi Arabia, Iraq, Qatar and Iran. Washington and Teheran accuse each other of breaching the terms of an interim peace agreement, which was meant to reopen the strait but worded ambiguously as to how fast that would happen.

Ceasefire in doubt

Since tensions escalated in the week ended Jul 12, the US has reimposed its blockade on Iranian ports and ended a waiver on oil sanctions, moves that threaten to further weaken Iran’s economy. The rial has fallen about 20 per cent against the US dollar over the past month, according to Bonbast.com.

US Vice-President JD Vance, in an interview with podcaster Joe Rogan, rejected the idea that talks with Iran are futile and said Washington would not deploy ground troops to topple the government.

“We’re not going to send 150,000 ground troops in order to accomplish a change in a regime unless the people on the ground themselves want to accomplish that outcome,” he said, referring to Iranians.

Iran’s parliamentary speaker and chief negotiator in the now-stalled peace talks with the US, Mohammad Bagher Ghalibaf, said his country had “no reason to remain committed” to an interim deal the two sides signed in June. He stopped short, however, of saying Iran would formally withdraw from the so-called memorandum of understanding.

Early on Thursday, the US struck a supertanker near Iran’s Kharg Island export terminal after the Curacao-flagged “unladen” vessel ignored multiple warnings while heading toward an Iranian port. The latest US campaign has focused on radar, missile and drone facilities rather than the broader bombing seen in March and April.

“The ceasefire is over, with vessels under heavy Iranian fire,” RBC analysts including Helima Croft said in a note to clients. “We do not see Hormuz traffic returning to prewar levels as long as shippers have to contend with the threat of mines, missiles, drones and Teheran tolls.” BLOOMBERG