Iran restricts Strait of Hormuz, allows vetted allied ships to pass

Insights

• Iran has imposed a selective blockade of the Strait of Hormuz, vetting and authorising vessels from allied countries.
• Countries granted passage include the Philippines, India, China, Russia, Pakistan, Iraq, Malaysia, Thailand and Greek-linked vessels.
• Since early March just 142 ships have transited, roughly what would normally pass in a single day, and daily traffic has fallen to single digits on some days.
• About 2,000 vessels are waiting on either side of the strait for clearance, according to the International Maritime Organization.
• Vetted ships are often routed through Iranian territorial waters under a pre-approved routing system described as a toll-booth mechanism.
• There are reports Iran is charging or seeking transit fees, with some payments reportedly settled in Chinese yuan and a parliamentary plan to formalise fees.
• The strait handles about 20 percent of global oil and LNG flows, so restricted access is raising shipping costs and global energy price risk.