Iran has officially established the Persian Gulf Straits Authority (PGSA) to enforce mandatory passage controls in the Strait of Hormuz. This waterway, which carries approximately one-fifth of the world's oil and liquefied natural gas transport, has seen its daily traffic plummet from 100-135 vessels to about 6, a decrease of 941 TP3T.
What did PGSA do?
The PGSA sends a document called the "Vessel Information Declaration Form" to shipping companies, requiring all vessels to submit detailed information before entering the strait: vessel ownership, crew nationalities, cargo details, and voyage plans. Lloyd's List Intelligence identifies it as "the only agency authorized to approve passage through the strait."
The PGSA's wording regarding the consequences of failure to declare or making false declarations is "to bear the corresponding consequences."
This effectively turns wartime-style temporary vetting into a permanent system. Previously, the Iranian Revolutionary Guard Navy had required ships sailing near the Iranian coastline to submit crew and cargo information, with some ships also required to pay "passage fees." The establishment of the PGSA formalizes this process.
According to maritime risk consultancy Marisks, Iran charges some vessels passage fees as high as $2 million per vessel.
Who is trapped?
On May 6, U.S. Joint Chiefs of Staff Chairman General Dan Caine said that more than 1,550 merchant ships and about 22,500 crew members are currently stranded in the Persian Gulf.
A CMA CGM container ship was attacked while attempting to pass through the Strait of Hormuz, injuring crew members. Hapag-Lloyd has four ships stranded in the Persian Gulf, and the company says the situation in Hormuz is costing it $60 million a week, mainly due to soaring fuel and insurance costs.
Ship war risk premiums have surged from less than 11 TP3T to 31 TP3T-101 TP3T. Most shipping companies still consider the risks of navigating the strait too high.
""Project Freedom" was shut down after two days.
On May 4, Trump announced "Project Freedom," a plan to have the U.S. military "guide" merchant ships through the Strait of Hormuz. Two ships successfully passed through. However, just two days later, Trump abruptly suspended the plan, stating that more time was needed to reach a peace agreement.
A Maersk car carrier, flying an American flag, transited the Strait of Hormuz on May 5 under US military escort; the crew was safe. However, this is an exception, not the norm.
Saudi Arabia has made it clear that it does not support the US using force to reopen the Strait of Hormuz. A Saudi official revealed that Riyadh was not consulted beforehand and was informed that the US should not use Saudi territory and bases to carry out such operations.
What does the law say?
The United Nations Convention on the Law of the Sea (UNCLOS) stipulates that straits used for international navigation are subject to the "transit passage" regime, and ships of all countries have the right to continuous and free passage, and coastal states may not require prior permission or collect passage fees.
Maritime law experts believe that the PGSA's review and fee collection mechanisms directly violate this principle.
The reality is that Russia and China previously vetoed a UN Security Council resolution calling for the reopening of the Straits. The US and its Gulf allies are pushing for new sanctions resolutions, but progress has been limited.
How long does recovery take?
DHL Global Forwarding estimates that it will take at least 4-6 months for the Straits to return to normal traffic.
Verisk Maplecft energy analyst Kaho Yu points out that even if the ceasefire agreement holds, the shipping market will not quickly return to its pre-crisis state. "Refineries, shipowners, and traders will remain cautious until they see clear evidence that the Hormuz conflict will not escalate further.""
Razat Gaurav, CEO of supply chain management company Kinaxis, stated that even with improved conditions, the recovery of shipping capacity and routes will take weeks or even months. "Air freight is recovering faster, but ocean freight has longer delivery cycles and contractual constraints.""
Impact on shippers
The current pattern of detours along Middle Eastern routes is unlikely to change in the short term. Maritime and air transport via the Strait of Hormuz and the Persian Gulf will continue to be hampered, and fuel surcharges and Middle Eastern transshipment premiums are expected to rise further.
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