Hormuz Chokehold: Tanker Traffic Collapses as US-Iran Ceasefire Expires

The numbers are stark. Only three vessels transited the Strait of Hormuz on Sunday, according to Kpler data, down from roughly 130 daily before the US-Israel-Iran war began on February 28. The five-day moving average stands at just 12 transits.^[1] Lloyd’s List Intelligence reports an 18% decrease in total Strait traffic.^[2] This is not a temporary dip — it is a structural closure of the world’s most important oil shipping lane, through which a fifth of global oil and LNG flowed before the conflict.^[3]

The 60-day ceasefire memorandum of understanding signed on June 17 expired Monday. Trump told Fox News he is “not looking to extend” the deal.^[1] Iran’s foreign minister Abbas Araghchi said the two sides “do not have anything like a ceasefire” and that “no negotiations have been held between the United States and us at this time.”^[1] Qatar and Pakistan are exchanging messages between the parties, but Tehran does not consider that channel to be negotiations.

Iran shifts to “fully offensive”

A senior Iranian official told Reuters on Monday that Iran has decided to shift its policy from defensive to “fully offensive” due to the deadlock in diplomacy, and would conduct a “timely and precise” military attack to break the US naval blockade if diplomacy fails.^[3] This is the most explicit escalation threat from Tehran since the war began.

Trump, meanwhile, told Fox that the US would “bomb the shit out of” Oman if it “gets in the way” of a deal with Iran. He also told a rally on Friday that “after we finish defeating Iran … pretty soon I’ll be declaring the Hormuz Strait a territory of the United States.”^[3] Iran and Oman have been negotiating a separate agreement on managing the strait, which the two nations share — Trump’s rhetoric places that bilateral diplomacy directly in the crossfire.

Oil rebuilds its risk premium

ICE Brent traded just below $90/bbl in early Asian trading on Monday, extending the prior session’s gains.^[4] Brent peaked at $126/bbl earlier in the war, roughly 75% above pre-war levels, before retreating as covert shuttle operations kept some crude flowing.^[3] Speculative positioning turned sharply more bullish: money managers increased net long ICE Brent positions by 76,026 lots to 240,748 lots, the largest bullish position since early June.^[4] The US Energy Information Administration raised its Q3 Brent forecast to $85/bbl, citing Hormuz disruptions.^[5]

The stock market response was visible in energy equities at the August 17 close. USO (crude oil ETF) rose 2.91% to $130.29 and BNO (Brent oil ETF) gained 2.63% to $51.97 as of 16:00 ET.^[6] Among integrated majors, CVX rose 1.36% to $202.71 and XOM gained 0.89% to $161.52. ConocoPhillips (COP) closed at $127.56, up 0.62%. Meanwhile, the Eurozone ETF FEZ slipped 0.26% to $71.91 — a modest but telling signal from energy-import-dependent Europe.^[6]

Three chokepoints, one crisis

The Hormuz crisis is not happening in isolation. A deadly Houthi attack on a vessel in the Red Sea on August 12 added to supply chain uncertainty, with the UN confirming that ships sailing to and from the Red Sea and Suez Canal represent 12–15% of global trade.^[2] On Monday, Houthis claimed an attack on a Saudi military ship and four escort vessels in the Bab el-Mandeb Strait, the chokepoint connecting the Red Sea with the Gulf of Aden.^[3] Fastmarkets reports shipping crises on three fronts simultaneously — Hormuz, the Red Sea, and a third route — hammering commodity supply chains with higher prices and longer lead times.^[2]

With both Hormuz and Bab el-Mandeb under active threat, the diversion burden on the Cape of Good Hope route is intensifying. The UN’s UNCTAD agency has flagged the compounding effect of multiple chokepoint disruptions on global freight costs.

US supply response accelerates but cannot fill the gap

US drilling activity continues to expand. The oil rig count rose by one to 455 active rigs, the third consecutive weekly increase and the highest count since May 2025.^[4] The EIA estimates US crude production will average 13.8 million barrels/day in 2026, up from 13.6 mb/d in 2025, before rising to 14.2 mb/d in 2027.^[4] But this incremental supply — roughly 200,000 b/d year-on-year — is a fraction of the ~20 million b/d that flowed through Hormuz daily before the war. US shale cannot substitute for a closed Gulf chokepoint, and well completions lag permits by months.

The China second front

While Hormuz dominates the immediate risk picture, the US-China trade front is deteriorating in parallel. On August 6, Beijing launched its broadest package of trade countermeasures since last October’s Busan truce — sanctioning seven American companies, tightening export controls on US-bound drones and dual-use technology, and prohibiting Chinese firms from cooperating with US compliance and certification bodies.^[7] The same week, Trump signed a 15% tariff on Chinese polysilicon, a key input for semiconductors and solar panels.^[8]

BNP Paribas noted that Beijing is “starting to replicate” Washington’s playbook — rather than just absorbing US restrictions, China is now actively constraining the flow of its own technology to the US.^[7] Eurasia Group warned that more aggressive US steps, such as restricting Chinese open-weight AI models or cloud access to chips, would put the truce at risk.^[7] The Xi-Trump summit scheduled for September remains on track but is increasingly fragile.

Rising US Treasury yields add a third pressure layer: the 10-year note cleared at 4.683% in last week’s $42 billion auction, the richest yield since the eve of the global financial crisis.^[9] Asia’s policymakers are watching that number closely, aware of what sustained high yields have historically meant for the region.

What to watch next

1. Iran’s deadline. Tehran has set a short period — “a few weeks” — by which all MoU provisions must be implemented by the US as a precondition for further talks.^[3] The exact deadline has not been publicized but will be shared via mediators. Watch for whether Iran acts on its “fully offensive” threat or whether back-channel diplomacy via Qatar and Pakistan produces a lifeline.

2. Oman’s response. Oman has been silent so far but is negotiating a separate Hormuz management agreement with Iran.^[1] If Oman accedes to a deal Trump rejects, the US-Oman relationship — a cornerstone of Gulf security architecture — enters uncharted territory.

3. Brent’s next leg. Speculative net longs are at their most bullish since early June.^[4] If Hormuz traffic stays at single digits and the ceasefire stays dead, $90 is a floor, not a ceiling. Watch for whether $100-plus Brent reignites inflation concerns and forces a Fed policy reassessment, particularly with 10-year yields already at 4.683%.^[9]

4. China’s September summit. If Xi’s Washington visit proceeds amid escalating tit-for-tat sanctions, markets will read either a de-escalation or a breakdown.^[7] The polysilicon tariff and drone export controls are reversible bargaining chips — but only if both sides choose to bargain rather than build further leverage.

5. US shale ramp. 455 rigs and 13.8 mb/d is a meaningful response,^[4] but the timeline from permit to production means new barrels arrive months from now. Watch the EIA’s monthly production figures for whether the shale machine can accelerate faster than the Hormuz crisis deepens — and whether the Trump administration’s energy policy shifts toward more aggressive offshore and federal-lands permitting to compensate.