'90 TO 100 MILLION': Oil barrels remain trapped in the Strait of Hormuz

Well, there may be an extended ceasefire agreement between the U.S. and Iran, but the Strait of Hormuz is still facing a major traffic jam. One oil refiner issued a stark warning that untangling the maritime mess is going to take a while. Speaking at a J.P. Morgan conference, Phillips 66 CEO Mark LeShear said between 90 to 100 million barrels of crude oil remain trapped in the Strait and that, quote, it's going to be a long, drawn-out, paced process to get that oil out. Meanwhile, ships are still trekking through. Global data and analytics firm Kepler confirmed to Fox Business that so far today, five vessels have successfully crossed through the Strait. To help us make sense of what's going on there minute by minute, joining me now in a Fox Business exclusive is Kepler principal freight analyst Matthew Wright. Matthew, this morning it was five. Has that changed at all? I just want to make sure our viewers get the updated number. Yeah, it is. It's certainly rising. I mean, yesterday we had a total of low 30s, so we would actually expect that to be well above five today. And, you know, well, apart from a little blip over the weekend where Iran announced that it was closed day on day, we're seeing more and more vessels making it through both in and out. All right. So right now, I believe the average is about 26 commodity vessels coming through. That is obviously a major uptick from what we saw during the war, where it was virtually completely blocked and that was only 10 vessels during an individual day. Pre-war, it was more like 87 vessels. So how long do you think it will take to move that hundred million barrels that are stuck in the Persian Gulf that Mr. Lashir just referenced to get out of there and be seaborne? Yeah, so we expect some of the we could see all the vessels that are trapped with cargoes in the Middle East Gulf exit within the within the next 30 days, potentially less. They are taking priority. We're seeing more exits than we're seeing new vessels come in. These are vessels that have been laden with cargo for two or three months in some cases. So, you know, there's an urgency to get those cargoes out. What will take time is to build the confidence to get new vessels into the Middle East Gulf through the Strait of Hormuz. And that's going to take a little bit longer, we think, to get back to sort of some level of normalization could take through to September. Through September. Now, yesterday, President Trump put something out on Truth Social where he claimed that, quote, 19 million barrels of oil flowed out of the Hormuz Strait yesterday, an all time record. However, we checked a bunch of stats and prior to the war, it was about 20 million barrels of oil passing through the Strait daily. Kepler confirmed to Fox Business that yesterday the Strait had what, about 39 vessel crossings. But if at the height of prewar, it was 20 million barrels a day and 87 tankers. Don't mean to get people confused with the math, but how is it possible for that math to work that 19 million barrels came through on just 25, 26 or 30 vessels? Yeah. Yeah, that doesn't that's not consistent with the numbers we're seeing. I mean, I think we should be optimistic. We saw between 10 to 13 million barrels a day of crude and refined products leave over the last three or four days every single day. So this is substantially higher than what we saw. We were seeing one below one million barrels a day for a long period through March and April. So we are substantially higher. OK, it's not 19 million barrels a day. It will take some time to get there, but these are still very, very important steps in the right direction. Is Karg Island getting up to speed as quickly or are there bigger problems there that we don't know about but that you can illuminate us on? Yeah. Yeah. So Karg Island, obviously the main export terminal for Iran. This has been a crucial part of the negotiations, obviously, between the U.S. and Iran. The U.S. have obviously blockaded the Gulf of Oman, and that really had a very significant impact. We saw loadings from Karg Island fall to nothing. That is now steadily starting to ramp up and will and will continue to do so. I think crucially, one of the most important things we've seen is this waiver for sanctioning Iranian oil. That is a very, very important step, and that is a significant development in terms of the negotiations, because that will open up new buyers to Iranian oil. At the moment, almost all of that goes to China. But over time, if this waiver maybe transitions into a full lifting of sanctions, that would have huge significance, both in terms of the tankers that are able to to load these cargoes, but then also the value of the cargo. Iran, Iranian crude sells at quite a steep discount, and if sanctions were lifted, they will be able to earn a lot more from it. So that is something that the U.S. administration is obviously thinking about very, very closely. Yeah. People are questioning whether there is any kind of limitation on how the money that Iran can now make in the next 60 days off that oil, whether there's any limitation on that, as in you can't spend it to build up your ballistic missile program and then turn around and fire missiles at U.S. ships or Israeli areas. So, I mean, that's I think that is the big question at the moment where people want a lot more granularity on what this deal truly entails. Yeah, and there's a lot of questions across across the whole deal, and I think there's a lot of there has to be a very high degree of trust at the moment, particularly for ship owners to enter the shipments. There's a huge amount of trust. This is this is what's going to be the main delay here. It's building trust, rebuilding confidence from the shipping community that if they do enter the shipments that they're not going to be arbitrarily fired on by the IRGC. And and at the moment, there are still a lot of gaps. There's still a lot of ambiguity around the deal. But at the moment, we are seeing shippers bit by bit start to rebuild confidence. But I should I should make it clear this is the slow build is exactly as we expected. You know, the first month is the sort of we see the first movers. These are the independent ship owners, a little bit more risk tolerant. It won't be until maybe 20 to 30 days that we start to see the listed ship owners, some of the larger players who want to kind of wait and see what the the other owners are doing. So the trajectory we're on is exactly consistent with what we were expecting. Really quick, Matt, you talk about who's more risk tolerant. What about the insurance piece of this? Lloyd's and Chubb have put together a four hundred I believe it's about a four hundred million dollar marine war risk insurance opportunity for vessels that are transiting the Strait of Hormuz. I mean, if the private market is still treating the waterway like a massive risk, there's somebody taking a bet that this could be a problem. Yeah, absolutely. I mean, insurance has been available throughout the war. If for somebody who for a vessel that wants to make the transit, it's very expensive. But the freight that the cost of the cost that the ship owner is being paid has been even higher. So from, you know, taking a crew tanker, you know, they are earning well over one hundred thousand dollars a day, you know, close to it from the US to the Strait of Hormuz. They'd be opening earning over one hundred and fifty to two hundred thousand dollars a day. They more than cover the insurance costs. But but the insurance is a barometer. The insurance risk there is sort of a reflection of the fact that it is still exceptionally risky. We're only a few days into this into this deal. And a lot of owners will want to see the joint war committee announced that rates are going to steadily decline. Matt Wright of Kepler, we thank you for opening up your books and letting us know exactly what's really going on in the Strait. We are coming right back.