Ceasefire hasn’t removed oil and shipping risk

Oil traders got the ceasefire headline they wanted on April 7, and Brent crude briefly dropped below $100 a barrel. Two days later, Saudi Arabia was still reporting pipeline and field damage, and shipowners were still treating the Gulf like a live combat zone. (time.com, cnbc.com) The problem is that a ceasefire can stop some bombing without restoring the machinery that moves oil. Saudi Arabia’s East-West pipeline, the line that sends crude from Gulf fields to the Red Sea port of Yanbu, had its throughput cut by 700,000 barrels a day after an attack on a pumping station. (cnbc.com) That pipeline matters because it is Saudi Arabia’s workaround when the Strait of Hormuz is unsafe. It can carry 7 million barrels a day, so damage to it hits the backup route at the same time the main route is under pressure. (cnbc.com) Saudi Arabia also said attacks on the Manifa and Khurais facilities cut another 600,000 barrels a day of output. CNBC reported Gulf producers have shut down about 13 million barrels a day because disruption in the strait is still blocking normal exports. (cnbc.com) The Strait of Hormuz is only about 20% of global oil supply on paper, but in practice it works like a single narrow bridge for the Gulf. Before the war, roughly 20% of world oil supply and an average of 178 ships a day moved through that passage. (cnbc.com, weforum.org) Even after the ceasefire, traffic did not snap back. CBS reported that only about a dozen ships passed through the strait in the first two days of the truce, far below normal levels. (cbsnews.com) Shipping is staying slow because captains and insurers are reacting to rules, not speeches. Lloyd’s List reported on April 9 that flows through Hormuz had fallen further despite the ceasefire, with Iran asserting control through transit rules, threats of force and an unofficial toll system linked to the Islamic Revolutionary Guard Corps. (lloydslist.com) Insurance is the other choke point. The World Economic Forum said major maritime insurers have suspended or repriced war-risk cover for ships using Hormuz and the Persian Gulf, and the Lloyd’s market expanded its high-risk designation to cover the entire Persian Gulf. (weforum.org) That means the oil price on a screen is only part of the bill. A cargo can be available, but if the ship needs special war cover, a naval escort, a longer route, or extra waiting time outside the Gulf, the delivered cost still rises for refiners, airlines and factories. (weforum.org, lloydslist.com) The military risk also did not disappear with the truce. NBC News reported on April 9 that Iran was still launching dozens of ballistic missiles and drones across the region on a daily basis, hitting bases, oil and gas sites, airports, hotels and ports. (nbcnews.com) NBC also reported that even after heavy U.S. and Israeli strikes, experts said Iran’s drone capacity is harder to erase than its missile launchers because drones can be hidden more easily and launched from trucks. That leaves every port operator and tanker owner guessing whether the next attack lands on a refinery, a pumping station or a harbor approach. (nbcnews.com) So the ceasefire changed the mood faster than it changed the map. Oil is no longer pricing a straight-line panic, but shipping companies, insurers and manufacturers are still pricing a region where one damaged pump, one drone launch or one new transit rule can jam the system again overnight. (time.com, lloydslist.com, cnbc.com)