Eyes on the Strait of Hormuz as oil tankers start moving

**Sarah Rogers** (0:01)
The first tankers crossed the Strait of Hormuz under the New Iran deal. We hear how they're navigating an underwater minefield. It's World Business Express from the BBC World Service. I'm Sarah Rogers. We also hear from Russia as fuel shortages hit drivers. And Apple users feel the crunch as chip costs push up prices.
But first, yes, eyes are on the Strait of Hormuz as tankers start moving through that vital shipping route. It follows President Donald Trump and Iranian officials signing a Memorandum of Understanding to end their war.

**Jacob Larsen** (0:41)
Yes.

**Sarah Rogers** (0:44)
But applause there during the signing in Versailles, as Trump attended the G7 Summit. It is now in effect, we're told, the agreement extends the troops for 60 days to give both sides time to make a full peace deal.
But what does that mean for global shipping now? Jacob Larsen is the Chief Safety and Security Officer at the Baltic and International Maritime Council, which represents ship owners. He told me there are still many challenges ahead.

**Jacob Larsen** (1:12)
The most important one being the minefield we expect to be in place across the central part of the strait in the traffic separation scheme. In addition to that, there are still uncertainties regarding how the traffic should be arranged when leaving the strait. So if all ships decide to leave at once and try to use the inshore traffic zones, we possibly will end up in a situation with navigational problems, collisions, groundings and so on. So this is why we encourage ship owners to be careful and do a thorough risk assessment before deciding to start their transits now.

**Sarah Rogers** (1:43)
So how do you make it safe? How do you get rid of all the mines?

**Jacob Larsen** (1:47)
To get rid of the mines is potentially a bit of a challenge, but it can be done using military capabilities, mine hunters that can be on board ships or even helicopter systems. Also, there are remote systems that can clear mines. But the problem is that it takes quite a long time, especially when we are talking about relatively large waterway like the Strait of Hormuz, everything from a few weeks up to a few months.

**Sarah Rogers** (2:12)
Really a few months. We're hearing that there are a trickle of tankers going through. What do you know about what's happening right now?

**Jacob Larsen** (2:20)
Almost throughout the conflict, we have seen a few tankers and other ships go in and out of the Persian Gulf, using the inshore traffic zones, has been used primarily at night, where ships have gone out under the cover of darkness, with navigation lights switched off. And now that the transits are again permitted, then these routes can actually also be used during daylight. And that potentially could allow for increased volumes of ships to leave.

**Sarah Rogers** (2:46)
And what about tolls? We're hearing that it will be toll free for 60 days, but then Iranian tolls have been imposed as well.

**Jacob Larsen** (2:53)
Yeah, I think the MOU is a bit unclear on that point exactly, because it also goes on to stipulate that Iran and Oman will arrange for how traffic through the straits should be conducted in the future, taking into consideration international law. And under international law, you're not allowed to charge tolls. It's designated as an international strait, so freedom of navigation applies, and you're not allowed to put a toll on that. Let's hope that they don't proceed with this whole toll idea. That would be unfortunate, I think.

**Sarah Rogers** (3:22)
That was Jacob Larsen from BIMCO. Listening to that, though, I have Anna MacDonald, Investment Strategy Director at Hargreaves Lansdown. Now work on the details starts tomorrow, Anna, but oil prices have been falling this week. Where are we at now?

**Anna MacDonald** (3:37)
Well, if I take you back, we came into the year with oil at around $60, because the market was bracing for really oversupply, and then came the fear of the conflict and the actual Middle East conflict and the closure of the Strait of Hormuz. And we saw prices rally very sharply up to $120 or so a barrel.
But as they say, the solution for high prices is high prices. And we saw demand fall sharply once this peace deal started to be hammered out. And now the market's looking at looking through this, seeing that production might restart, as we've just heard, and if there is oversupply, that will put downward pressure on inflation. And politically, lower prices are exactly what Trump wants ahead of the midterms.

**Sarah Rogers** (4:23)
Yeah, and we've been talking about that global impact on fuel costs and inflation. And yesterday, the US held interest rates, though, at 3.75%. The Bank of England made its decision today as well, briefly.