Iran’s insurance, NATO intervention, and cables under threat: What’s going on in the Strait of Hormuz?

Traffic through the waterway has reportedly slightly increased, though the passage is still fraught with immense risks The Strait of Hormuz – a critical chokepoint accounting for 20% of seaborne oil trade prior to the US-Israeli war against Iran – remains effectively blocked despite the tentative ceasefire. The traffic has ground to a halt due to the risks posed by mines, recurring attacks, and ship seizures, as well as insurers’ reluctance to step in. The US maintains its own blockade on Iranian ports, with NATO countries reportedly considering taking on a role in escorting ships in the area. Despite the severe disruption, media reports suggest a slight uptick in traffic through the strait, with Iran reportedly offering a Bitcoin-based scheme to provide insurance to shipping companies. Here are the most recent developments in the Strait of Hormuz. NATO Hormuz intervention? On Tuesday, Bloomberg reported, citing a senior official, that NATO is mulling the possibility of escorting ships if the strait is not reopened by early July, though the idea does not yet have unanimous backing in the US-led military bloc. Read more 60 days later: The US-Israeli war on Iran so far NATO has been split over the US-Israeli war against Iran – deepening US President Donald Trump’s ire towards the bloc’s European members, who have signaled that they could take part in ensuring maritime security after the sides reach a sustainable peace. It is unclear how NATO would be able to step in even if a consensus is reached, Bloomberg noted, given that the US has not been able to establish control over the strait. Read more Hormuz and the end of the old oil order Iran develops shipping insurance On Monday, Fars news agency reported that Iran launched a Bitcoin-based shipping insurance service – ‘Hormuz Safe’. The government says the scheme will provide “fast, verifiable digital insurance” while generating an estimated $10 billion in revenue.

CoinDesk expressed skepticism, citing factors complicating passage, as well as the possibility of US sanctions on companies that accept the offer. According to Iranian media, the insurance would cover detention, inspection, and cargo confiscation, but not damage from weapons. Read more Iran conflict cost global businesses $25 bn – Reuters The scheme has also been interpreted as another attempt to establish a toll regime in the strait – which the US said it would not accept under any circumstances. A previous US attempt to guarantee insurance for shipping companies ended in failure. Early in the conflict, Trump announced that he ordered the US Development Finance Corporation (DFC) to provide up to $40 billion in reinsurance for all shipping through the Gulf, with Chubb, AIG, and Berkshire Hathaway named as backers. Read more Gulf of Oman could become ‘graveyard’ for US fleet – Iran According to the Financial Times, the program did not provide a single dollar of coverage because the precondition of US naval escort was not met. Has traffic through the Strait of Hormuz increased? While the current traffic through the chokepoint remains a fraction of that before the war, Lloyds List reported on Monday that at least 54 vessels – including ten Chinese-linked vessels – transited through the strait last week – more than double than a week prior. Before the war, around 3,000 vessels crossed the strait every month, compared to 191 in April. Read more Lavrov names overlooked agenda behind Iran war The apparent increase came after Iranian media reported that Iran began allowing some Chinese vessels to transit through the Strait of Hormuz after the two countries reached an understanding on Iranian management protocols for the waterway. Tehran also earlier signaled it would allow passage to ships not linke