Vessel tracking data indicates that only one bulk carrier linked to Iran departed the Persian Gulf in the past 24 hours, with no vessels entering from the opposite direction, resulting in a de facto suspension of commercial shipping. A small number of merchant ships attempted to navigate the strait by marking themselves as 'Chinese entities,' but few followed suit. The crisis has led to oil storage backlogs in multiple Gulf nations and forced production cuts. Saudi Arabia has redirected record volumes through the Red Sea alternative route; however, the actual rerouted volume remains significantly lower than its theoretical capacity.
The commercial shipping crisis in the Strait of Hormuz is deepening.
On March 9, according to vessel tracking data compiled by Bloomberg, this globally crucial energy corridor has been in a state of "near standstill" for seven consecutive days. In the past 24 hours, only one bulk carrier related to Iran exited the Persian Gulf, with no vessels entering from the opposite direction. The last commercial ship unrelated to Iran—a Chinese bulk carrier named 'Sino Ocean'—completed its transit early Saturday morning last week.
When passing through the narrowest waterway of the strait, the cargo ship broadcast a signal stating 'Chinese Ownership' (CHINA OWNER_ALL CREW), becoming the second vessel after 'Iron Lady' to transit with the identity marker of 'Chinese Shipowner.' However, such cases remain rare, with no significant increase in other Chinese cargo ships following this navigation approach.
The blockade effect of the strait is rapidly spreading along the supply chain. According to Bloomberg, oil tankers are unable to enter or exit the Persian Gulf normally, leading to continuous overcapacity in coastal storage tanks, with some refineries already cutting production capacity. Iraq has been forced to reduce oil output, with Kuwait and the United Arab Emirates following suit. As of last Friday, only nine idle Very Large Crude Carriers (VLCCs) remained in the Gulf.
Meanwhile, Saudi Arabia is shifting crude oil exports to the Red Sea route. In the first seven days of March, the number of VLCCs loaded at the Yanbu and Al Muajjiz terminals along the Red Sea coast reached a record high. However, analysts warn that whether this alternative route can sustain its functionality remains highly uncertain.
Only Iranian vessels pass through; commercial shipping has effectively halted.
According to vessel tracking data compiled by Bloomberg during the most recent observation window, in the past 24 hours, only one bulk carrier related to Iran exited the Persian Gulf, with no vessels entering from the Gulf of Oman. This indicates that two-way commercial traffic through the Strait of Hormuz has been effectively disrupted.
Repeated missile and drone attacks on merchant ships were the direct triggers of this shipping standstill. Bloomberg noted that ongoing missile and drone activities pose a "critical risk" to all nearby vessels, causing the vast majority of commercial shipowners to avoid this waterway.
According to an article by Wall Street News, a notification issued by the Joint Maritime Information Center (JMIC) on March 6 showed that there were only two confirmed commercial voyages in the Strait of Hormuz within the past 24 hours, both involving cargo ships rather than oil tankers, with traffic volumes dropping to single digits. Data from Lloyd’s Market Association indicates that approximately 1,000 vessels, with a total value of about $25 billion, remain stranded in the Gulf and surrounding waters, with most still waiting and observing.
Notably, Bloomberg cautioned that real-time vessel tracking near the Strait of Hormuz faces significant challenges due to widespread signal interference and transponder shutdowns. Vessel positions often cannot be confirmed until several days later when they reappear in satellite signals, meaning actual traffic volumes may be somewhat underestimated.
"Chinese identity" becomes a pass for crossing the strait, but few follow suit.
In a small number of successful transit cases, the 'Chinese identity' marker is becoming a method for some vessels to attempt risk avoidance.
According to the Liberation Daily report, on March 5th Beijing time, the bulk carrier "Iron Lady" changed its transponder signal to "China Owner" and successfully crossed the Strait of Hormuz along the coast of Oman.
Subsequently, the Liberian-flagged bulk carrier "Sino Ocean" adopted the same strategy at around 7:00 a.m. on March 7th, continuously broadcasting the signal "CHINA OWNER_ALL CREW" when crossing the narrowest part of the strait, becoming the second vessel to use this method to cross.
This practice is prompting imitation in the commercial shipping industry. According to media analysis citing Marine Traffic data, in the past week, at least ten vessels have modified their transponder signals to claim association with China, covering various types such as container ships and oil tankers.
Matthew Wright, an analyst at shipping data company Kpler, pointed out, "They can almost change anything they want, filling in whatever they wish. The crew is trying to conceal associations with specific ports, destinations, or nationalities, which involves a certain element of deception."
He also noted that this practice of using identity disguise to avoid risks is not the first appearance, dating back to the Houthi attacks on merchant ships during the Red Sea situation in 2023.
Despite the successful passage of the Iron Lady, according to a report by Jiefang Daily on the afternoon of March 7, this case remains rare, with no additional Chinese cargo ships following its navigation strategy for now.
Saudi Arabia's Red Sea exports hit a record high, but alternative routes carry potential risks.
Facing the substantial obstruction of the Persian Gulf exit channel, Saudi Arabia is actively activating alternative routes.
According to Bloomberg, Saudi Arabia is transporting crude oil via the east-west pipeline to the Red Sea coast. In the first seven days of March, a total of eight supertankers were loaded at Yanbu and the nearby Al Muajjiz terminal, each with a capacity of approximately 2 million barrels. If Saudi Arabia maintains this loading pace for the rest of the month, the monthly export volume will reach about 2.3 million barrels per day, approximately 50% higher than any single month’s Red Sea export volume since the end of 2016.
According to data from Saudi Aramco, the nominal capacity of the east-west pipeline is approximately 7 million barrels per day. However, prior to the conflict, the actual operational volume was less than half of its rated capacity, theoretically leaving an additional transport capacity of about 5 million barrels per day. Nevertheless, this alternative route faces two major potential obstacles:
First, the aforementioned facilities have never reached their nameplate-rated production capacity, and it remains uncertain whether they can sustain prolonged high-intensity operations.
Second, the primary buyers of Saudi crude oil are concentrated in Asia. Most shipments from Yanbu Port are destined northward via the Suez Canal, with very few heading south to Asia—only one very large crude carrier (VLCC), the 'Arsan,' has sailed south from Yanbu this month, bound for Malaysia.
Meanwhile, Yemen’s Houthi forces have threatened to resume attacks on shipping in the southern Red Sea following strikes by the US and Israel against Iran. The security of the Red Sea route itself also remains questionable.
Goldman Sachs estimates that the net rerouting volume achieved over the past four days via the pipeline and the ports of Yanbu and Fujairah is only approximately 900,000 barrels per day, far below the theoretical rerouting capacity of 3.6 million barrels per day.
Goldman Sachs also warned that this week's attack on Fujairah Port and its storage facilities, a shortage of marine fuel in the area (typically imported through the Strait of Hormuz from the Gulf), and previous attacks on the pipeline all pose downside risks to rerouted flows.
Supply chain pressures continue to mount.
The ongoing blockade of the Strait of Hormuz is causing ripple effects along the energy supply chain.
According to Bloomberg, as tankers are unable to enter or leave the Persian Gulf normally, coastal storage tanks are continuously accumulating pressure, forcing some refineries to cut production capacity. Iraq has already taken the lead in reducing oil output, followed by Kuwait and the UAE. As of last Friday, only nine idle very large crude carriers (VLCCs) remained in the Persian Gulf, with available shipping capacity under extreme strain.
From a broader perspective, the Strait of Hormuz handles approximately one-fifth of global oil trade flows. Its continued disruption cannot be underestimated in terms of its impact on global energy markets.
Although Saudi Arabia's alternative exports via the Red Sea have provided some buffer, calculations by Goldman Sachs indicate a significant gap between the actual rerouting volume and its theoretical potential. Coupled with security threats faced by the Red Sea route itself, the substantial effect of global oil supply substitution remains highly limited.
Editor/Lambor
