① U.S. President Trump stated that the United States and Iran have reached an excellent agreement, with the document now in the final drafting stage and expected to be finalized and signed within the next few days; ② The CEO of Norwegian tanker company Frontline said that if the U.S. and Iran reach a stable agreement, shipping traffic through the Strait of Hormuz will increase rapidly.
On Thursday, Eastern Time, the U.S.-Iran negotiations appeared to show renewed signs of progress: President Trump stated that the two sides had reached an excellent agreement, with the document now in the final drafting stage and expected to be finalized and signed within the next few days.
Norwegian tanker company $Frontline (FRO.US)$ The company's Chief Executive Officer remarked that if the United States and Iran reach a stable agreement improving security conditions in the Strait of Hormuz, commercial shipping traffic through the strait would increase rapidly.
“I am actually very optimistic that once the situation turns favorable and the U.S. and Iran reach some kind of agreement—at least confirming they won’t attack shipping—traffic along these routes will resume quickly,” said Lars Barstad, CEO of Frontline, in an interview.
Some vessels are already poised and ready
Frontline currently operates a fleet of 80 tankers transporting crude oil and petroleum products globally. Barstad noted that five of its tankers are currently stranded in the Persian Gulf due to the closure of the Strait of Hormuz.
Barstad stated that although shipping traffic through the Strait of Hormuz is unlikely to return to pre-conflict levels in the short term—when 130 to 140 vessels passed through daily—the number of ships transiting the strait each day would rise significantly and rapidly if the U.S. and Iran reach a peace agreement. Currently, traffic through the strait has dwindled to just 5 to 10 vessels per day.
Barstad added that some shipping companies have already positioned their tankers near the Gulf, anticipating a swift transit through the Strait of Hormuz once it reopens, allowing them to profit from the opportunity.
“Some participants are purely motivated by commercial interests, attempting to bet on this potential reopening and profit from it,” Barstad said. “You could say that keeping vessels stationed here is like holding a call option on a future event that may occur.”
U.S.-Iran negotiations remain shrouded in uncertainty
Although Trump claimed that documents related to the U.S.-Iran negotiation agreement have entered the final drafting stage and are expected to be finalized and signed within the next few days, it remains uncertain whether the United States and Iran will ultimately reach an agreement—especially given the ongoing instability in the security situation. After all, not long ago, Trump also stated he was planning to launch 'fierce strikes' against Iran.
In fact, Trump has previously made similar hints on multiple occasions that a deal was imminent. Meanwhile, Iranian officials have issued conflicting signals, stating that reports about a U.S.-Iran agreement are merely speculation and that 'Iran has not yet reached a final conclusion on any agreement.'
Indeed, this appears to have become a recurring pattern: Trump first threatens significant escalation, then backs down, claiming a deal with Iran is just around the corner, while Iran responds with denials—a cycle that seems to repeat itself continually.
‘Almost every Friday, we seem close to reaching a deal, only to be disappointed again by Monday,’ Bastard said.
Gulf-region oil urgently awaits export.
Bastard noted that approximately 10% of the world’s largest oil tankers—very large crude carriers (VLCCs)—are currently stuck in the Gulf. These tankers are fully loaded with crude oil, with each capable of carrying up to about 2 million barrels. He believes that once passage through the strait resumes, these large tankers will be among the first vessels to depart from the Strait of Hormuz.
Bastard pointed out that Gulf states urgently seek to export crude oil, as their storage facilities are already full and disruptions to the strait have caused them substantial economic losses.
‘You will see a massive volume of oil transported by sea,’ Bastard said, ‘but there will still be logistical challenges in quickly loading and shipping out all the oil that Gulf states want to export.’
Due to the prior months-long closure of the Strait of Hormuz, the global tanker fleet has been dispersed worldwide, sourcing oil from regions such as the U.S. Gulf Coast. In May, Amin Nasser, CEO of Saudi Aramco, stated that redeploying these tankers would become the biggest obstacle for Gulf states seeking to ramp up oil exports through the strait once passage resumes.
However, Bastard noted that the freight costs associated with redeploying these tankers would be very high, which would incentivize them to return swiftly to the Middle East. He added that crude tankers traveling from the Americas to Asia could reach the Persian Gulf within just 30 days after discharging their cargo.
However, Middle Eastern exporters may still be unable to swiftly restore pre-war production levels fully, as some oil wells shut down during the conflict could suffer permanent damage due to lost reservoir pressure and water contamination.
“I think we cannot avoid the fact that oil output from the Middle East will be lower than it was before the (strait) closure,” Bastad said.
Threat level is being downgraded
Bastard also revealed that many shipping companies are waiting for the threat level to be downgraded from its current highest alert status before they dare transit the Strait of Hormuz.
The Joint Maritime Information Center (JMIC), a Bahrain-based security organization coordinating naval and commercial maritime operations in the Middle East, recently warned the shipping industry on June 4 that vessels transiting the Strait of Hormuz face a 'critical' threat due to 'heightened risks of attack or misjudgment.'
“This means that if you pass through this area, you could come under attack—hence, it is classified as the highest risk level,” Bastad explained.
On June 7, JMIC downgraded the threat level for the Strait of Hormuz from “critical” to “severe”—the second-highest level—“due to the safe passage of a significant number of vessels through the southern corridor near the Omani coast.” However, the organization cautioned that the strait still faces a “high risk of attack.”
Bastad believes that once the threat assessment is further downgraded—“when some of the red warning lights turn orange or yellow—you’ll see shipowners quickly begin sailing into the Strait of Hormuz.”
Currently, the number of vessels transiting the Strait of Hormuz has already increased. Trump stated on Wednesday that over the past month, the U.S. Navy has secretly assisted 200 commercial ships carrying more than 100 million barrels of oil through the strait.
Bastad noted that approximately half of the vessels currently crossing the Strait of Hormuz are using Iran-designated shipping lanes, while the rest navigate the southern corridor closer to Oman.
Editor/Joe