Us-iran ceasefire opens window for global fuel resupply, but uncertainty remains
A fragile overnight ceasefire between the United States and Iran has opened a window for global fuel supplies to partially resume, although uncertainty surrounding the terms of the agreement has left shippers and EU policymakers in limbo.
Uncertainty persists amid 'pause' in hostilities
Despite a possible halt in hostilities, EU Energy Spokesperson Anna-Kaisa Itkonen warned that the energy crisis affecting fuel prices will not be short-lived. 'We should be under no illusion that this crisis that is affecting energy prices will be short-lived. It will not be,' she said on Wednesday.
A two-week truce was announced just moments before a new round of US strikes was expected, with US President Donald Trump proclaiming a 'COMPLETE, IMMEDIATE, and SAFE OPENING' on his social media platform Truth. However, Tehran's own wording suggests something more conditional.
'For a period of two weeks, safe passage through the Strait of Hormuz will be possible via coordination with Iran's armed forces and with due consideration of technical limitations,' said Iranian Foreign Minister Seyed Abbas Araghchi.
Iran's 'Tollbooth' Remains a Concern
Since the effective closure of the Strait in early March, Iran has demanded from vessels making the crossing to pay at least $1 in Chinese Yuan or cryptocurrency, a system known as 'Tehran's tollbooth.' Rather than restoring free passage through the region, Iran could continue to enforce its informal system.
While Europe is less dependent on oil and gas from the Gulf than Asia, 40 percent of refined products such as jet fuel and diesel pass through the strait. Globally, the Strait of Hormuz handles roughly one-fifth of globally traded oil and liquefied gas.
Shipping Giants Remain Cautious
Benchmark oil prices fell on the news of the ceasefire, but shipping activity has yet to resume, with several major operators waiting for clearer security assurances before resuming routes. Shipping giant Maersk said the agreement does not yet provide 'full maritime certainty.' 'At this point, we take a cautious approach, and we are not making any changes to specific services,' the Danish shipping group told Reuters.
Even if the ceasefire holds, global shipping networks could take up to two months to normalize, warned Rolf Habben, CEO of German container carrier Hapag-Lloyd. 'Even if a ceasefire has now been agreed, I would say that it's fair to say that the conflict in the Middle East is still severely disrupting shipping,' he said in a call to customers.
Disruption Could Last 'Years'
In a sign of the fragility of the deal, Israel said it would continue its assault on Lebanon after the ceasefire was announced, despite Pakistan's prime minister having previously said that the agreed ceasefire covered 'everywhere including Lebanon.' Kuwait United and the United Arab Emirates, both US-allied countries, said Wednesday morning they were targeted by Iranian drones, a message later confirmed by Tehran.
'Let us be clear. A ceasefire is a pause, and the joint force remains ready, if ordered or called upon, to resume combat operations,' said Dan Caine, the US's highest military official.
Even if the ceasefire holds, global energy supply disruptions are likely to persist for years. Qatar accounts for roughly one-fifth of global LNG supply, and its energy minister has said Iranian strikes damaged liquid gas facilities, enough to sideline 17 percent of the country's export capacity for up to five years.