Commercial shipping through the Strait of Hormuz is once again off-limits in the near term as the renewed hostilities and threats to vessels led to another spike in risks of transiting the key tanker and container shipping lane, according to Masahiro Okafuji, chair of the Japan Foreign Trade Council.
“No one would go there, because it’s dangerous,” Okafuji told a media conference on Wednesday, as carried by Bloomberg.
Renewed re-routing of the shipping lanes around the Cape of Good Hope on Africa’s southern tip would hike transportation costs by over 30%, according to Okafuji, who is also chief executive at major Japanese trading house Itochu Corporation.
Following the re-escalation in regional hostilities in recent days, the Joint Maritime Information Center (JMIC) reaffirmed on Tuesday its regional threat level for the Strait of Hormuz at “severe”, which it had raised last week after the first signs emerged of the collapse of the U.S.-Iran ceasefire.
Set OilPrice.com as a preferred source in Google .
“The regional maritime security threat level remains SEVERE with further deliberate hostile activity likely under current conditions,” JMIC said.
“Mariners should expect sustained naval presence, increased IRGC hailing and monitoring along transit routes, and possible diversion of AIS-equipped vessels to the northern Iranian-controlled route. Enhanced force protection measures, increased VHF hailing, and congestion near anchorage areas should also be anticipated.”
Japan, meanwhile, has been scrambling for alternative oil supply in recent months as its key import route, the Strait of Hormuz, was blocked.
Before the Iran war, Japan and its refiners relied on the Middle East for a massive 95% of all crude imports. But the shock loss of supply forced refiners to seek alternatives and the government to release oil from strategic reserves to offset the lack of supply through the Strait of Hormuz.
Japan in April imported the lowest volume of crude oil from the Middle East on record dating back to 1979 as the Iran war and the closure of the Strait of Hormuz choked supply from the region.
The oil stocks release, Japan’s biggest ever, has helped refiners increase throughput in recent weeks. So has alternative supply from producers outside the Middle East, including the United States, as well as rare cargoes from Azerbaijan and Latin America.
By Michael Kern for Oilprice.com
More Top Reads From Oilprice.com
- U.S. Gasoline Prices Could Hit $4 Per Gallon Within Days
- Utility-Scale Solar Costs Rise 18% but Remain Cheapest Power Source
- IMO Urges Shippers Not to Risk Strait of Hormuz Transits
