Multiple vessels transiting the Strait of Hormuz have suffered attacks this week, Chevron Corp. (NYSE:CVX) Chief Executive Officer Mike Wirth revealed in an interview on Bloomberg TV on Friday. According to Wirth, these previously unreported incidents highlight ongoing risks for ships plying the channel despite any ongoing diplomatic efforts. Commercial shipping traffic through the key chokepoint–which normally carries 20% of the world’s petroleum–remains paralyzed with traffic at roughly 10% of its pre-war levels.
Wirth says Chevron currently has six vessels under charter operating within the Persian Gulf. However, the CEO is adamant that his company will not consider paying any form of toll or fee to secure passage for its cargo through the Strait of Hormuz. In any case, these ships belong to third parties, implying that the burden of paying Iran’s levies falls on them. Iran began demanding upfront cash payments of up to $2 million per tanker from select operators in March in exchange for guaranteed safe passage. However, the United States has strictly warned shipping companies that paying these illegal tolls risks violating Western sanctions.
Wirth has warned that global trade is unlikely to return to normal quickly, even if a peace agreement between the U.S. and Iran is soon reached, saying that shipowners and insurers must first rebuild confidence after months of seeing crews and ships trapped in the region. The United States and Iran are discussing a memorandum of understanding that would extend the current ceasefire and begin negotiations on a permanent settlement. The proposal includes a 60-day extension of the ceasefire, the reopening of the Strait of Hormuz, and further talks over Iran’s nuclear program.
While U.S. officials remain upbeat and have reported that Iran is negotiating in good faith, Iranian state media and officials have maintained caution, stating that no final agreement has been completely finalized nor confirmed yet.
By Alex Kimani for Oilprice.com
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