Container Bytes #38: The Sovereign Chokepoint and the July 1st BAF Reset

yeah i'm doing all right let's get into it so i hate to say it but let's start with the straight of her moves yes it's july 1st it feels like a bit of a broken record at this point but what can we do so there's a ceasefire but there's also some periodic exchanges of fire what's the latest there

Yeah, so there's still this ceasefire that was signed or agreed upon early in June.

But we've had instances of attacks on vessels and retaliations from the U.S. and back and forth.

There was more just this early this week.

And basically what we're seeing is kind of a power struggle, not over whether the Strait is kept open or not, but who's in charge.

So Iran has made it clear that even through the memorandum of understanding, they understand that they're going to have sovereignty over the waterway.

even though they

hadn't had sovereignty before the war.

And by international law, it seems like there should be kind of free passage that isn't sovereign to any nation, at least through what was the main channel.

But what we're seeing now is Iran basically saying to all vessels in the region, if you want to pass, you have to kind of coordinate with this authority that they set up.

and

follow their instructions and follow the path or the lane that they have set up, which is the northern kind of channel just along the coast of Iran.

There's another safe or secure channel at the moment, which is the southern channel around the coast of Oman, And on that channel, we had the IMO, which is the International Maritime Organization, the UN entity, that was orchestrating kind of an organized evacuation or transits in and out, mostly out of the Persian Gulf through this other channel.

But just this week, there was attacks.

It was an attack actually on a container vessel, an evergreen vessel that wasn't transiting through the Iranian one.

It wasn't exactly in the IMO one either.

And so the Iron Law has paused that effort, and negotiations now, whether they're starting or stopping is very unclear, are kind of focusing on that issue, what's going to happen in the strait.

So all this has meant kind of a stop and a start again of traffic through the strait.

And traffic is at much higher levels than it was in May and the very beginning of January, since the beginning of the war.

but not anywhere near back to where it was.

And the starting and stopping doesn't hurt.

As I said, the traffic is mostly out and it's mostly oil tankers or oil or LNG tankers.

Also some tankers entering, right? Because what the most kind of prioritized part is getting oil flows moving again.

But again, with the uncertainty and with the lack of security in some areas, it's been not as smooth as was maybe expected.