Safety Concerns and Shipping Industry Outlook

It's consider this where every day we go deep on one big news story, today. What will it take for oil to start flowing again? President Trump and Iran say an agreement has been reached to end the war and reopen the Strait of Hormuz It is said to be formally signed on Friday in Switzerland. I think a lot of great things are going to happen in the Middle East right now Very importantly, the oil is plummeting down And the stock market is shhooting up like a rocket That was President Trump speaking at the G seven meeting on Monday. The ongoing Iran war has sent oil prices soaring and has exacerbated inflation in the US A lot of that economic pressure is from the near total closure of the Strait of Hormuz since the war began almost four months ago. The Iran deal that we made is going to bring A lot of a lot of success to the world because The oil was really plogged up there for a while. Before the war, roughly a fifth of the world's oil traveled through the Strait of Hormuz. Now, the traffic is way below that, in part because of blockades put in place by Iran and the US But even if a deal ends those blockades, there's another major issue Safety. One major risk is the possibility of sea mines Here's retired U.S. Navy Admiral James Deavritis on CNN in April. I the master, the captain of a big two hundred thousand ton oil tanker. I'm not enthusiastic about having the honor of leading the first convoy through the Strait when this thing gets cleared up. Someone has to clear those minds Consider this, even with an agreement to reopen the Strait of Hormuz, it may take a while for activity to pick up in that crucial waterway What will it take for shipping companies to feel safe After the break, we'll hear from the chief safety and seecurity officer of a major shipping association. From NPR Eelsa Chang This message comes from the podcast Pod Save America. 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Listen every week to Waitwait Don't tellell me O on the NPBR app or wherever you get your podcasts It's consider this for NenPR With the U.S and Iran set to sign a memorandum of understanding on Friday, there is renewed hope that shipping traffic will move freely through the Strait of Hormuz once again As you know there Do a little hunting for A couple of Minds They've already found But it's essentially ships are starting to go out Now on Friday it'll be completely opened. As we keep hearing during the course of this war with Iran, the strait is a critical shipping channel, especially for oil and fertilizer. And so we turn now to Jacob Larson. He's Chief safety and seecurity Officer for BIMO, the International Shipping Association. Welcome to All thingsings Considered Thanks a lot. Nice to be you. Nice to have you. Okay, so as we just heard, President Trump expects the strait to be completely opened again in just a few days. But based on what you know, do you think ships will be able to pass quite safely through by then No, I think on the face of it, that that's quite unlikely. The situation is Basically unchanged compared to just before this year deal was announced last Friday So ships are still waiting inside the Persian Gulf. Both the US and Iran are still enforcing their respective blockades in the Straits of Hamus and surrounding waters And it's very difficult and very risky for for ships to move through the strait currently. What about the issue of mines? Because there's a question about whether Iran laid any mines in the strait during this war? What is your sense of that It's very difficult for me to assess whether they actually laid mines or not. So we are it in the hands of the naval forces there, If, as expected, they have laid bindes, then the whole central part of the Strait Hormes is considered a mind danger area and will be risky to go through But We are a little bit in the hands of the military here. We don't have any actual information ourselves regarding the mind threat, But from the looks of it, it could well take some few weeks or even a few months before the mine threat has been completely neutralized. What will it take for operators to feel confident that it is safe to sail through the strait What kind of information do you need What we need is assurances from both sides of the conflict that a given route is safe to navigate And with that, I think shipping will gradually start to pick up And of course, we need assurances also that hostilities will not be reopened. and that requires more than just unilateral statements. we need credible assurances from both sides And once that is in place and that they, you know, assure us that the route they declare open is actually safe to use, then we will see ships start to move But that doesn't mean that everything is honky dory, right becausecause there are still lots of unanswered questions. Well, one unanswered question is this question of fees, right? President Trump has declared the strait will be permanently toll free. But Iran has said that no tolls will be levied, but there will be so called fees. Did shipping companies pay fees to Iran prior to this war No, they didn't. The Strait of a Moose is in international straits and in accordance with international conventions, these have freedom of navigation so warships can can sail in and out as long as they do it in a proper and safe way And therefore these are not part of international law and it would R There's some debate about whether fees would even be legal, right? under internationalw. Yeah Eactly. Yeah Yeah, exactly. And ye international law has You know, that freedom of navigation concept, which is so broadly described in the UN Convention on the Law of the Seas. And that doesn't include anything about fees. and the Strait of Hormz is considered an international strait. Yeah. Well then how concerned are you that the flow of goods through the Strait of Hormuz will be permanently changed as a result of this war? I mean, it's obviously concern also given that the international rules based order seems to be under a lot of pressure these recent months And so there is some concern obviously, and shipping industry is a firm supporter of international conventions because it's really