Frontline CEO Lars Barstad announced that shipowners are waiting for someone to tell them it's safe to drive boats through a strait they're already being paid to drive boats through. The threat assessment needs to be downgraded first. Not eliminated. Just downgraded. From "terrifying" to "moderately concerning" and suddenly every tanker captain becomes Magellan.
This is what passes for strategic thinking in the oil shipping business. Barstad sees traffic quickly increasing if the U.S. and Iran reach a deal. If. The entire industry is paralyzed by a conditional clause. Billions of dollars in maritime infrastructure sitting idle because nobody wants to be the first guy to find out if the Iranians are still mad.
The Strait of Hormuz is twenty-one miles wide at its narrowest point. You could accidentally sail through it while drunk. But Barstad's waiting for a formalized risk downgrade before he commits to operating the ships his company exists to operate. It's like a pizza delivery driver refusing to leave the store until the mayor declares the streets officially safe from potholes.
Retail traders will read this headline and immediately start charting crude oil futures based on diplomatic optimism. They'll draw trendlines on hope. They'll set stop losses based on a State Department press conference that hasn't happened yet. Some guy in Michigan just bought USO calls because a Norwegian shipping executive used the word "quickly" in an interview.
Barstad didn't say traffic would increase if tensions actually decreased. He said it would increase if the U.S. and Iran reach a deal. The deal could be written in crayon on a Denny's napkin. Doesn't matter. As long as there's paperwork, the ships move. Because nothing says "legitimate risk assessment" like waiting for two countries who hate each other to pinky promise they'll behave.
The tankers will go exactly where the insurance rates tell them to go, signed treaty or not.
Photo by Amin Zand Miralvand on Unsplash
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