Why The Strait Of Hormuz Isn't Back To Normal & New Allegations Against China

**Mike Baker** (0:00)
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It's Wednesday, the 17th of June. Welcome to The Presidents Daily Brief. I'm Mike Baker, your eyes and ears on the world stage. All right, let's get briefed. First up, ships are supposed to begin moving through the Strait of Hormuz once again, but the world's most important energy corridor remains far from normal. We'll look at why the road to recovery could take months or even longer. Later in the show, European officials accused China of training Russian troops for combat in Ukraine. That's a claim that Beijing is denying. Well, of course, they're denying it. Plus, federal authorities say they disrupted an alleged plot targeting the UFC Freedom 250 event at the White House. Did you catch that? Multiple suspects are now in custody after reportedly discussing plans involving drones and gunmen. And in today's Back of the Brief, forget spy satellites and secret wiretaps. Intelligence agencies around the world are increasingly just buying massive amounts of consumer data from private companies to help identify and track potential targets. But first, today's PDB spotlight.
President Trump says ships are beginning to move once again through the Strait of Hormuz, following the signing of an initial memorandum or agreement or deal, whatever we're calling it. Now, oil prices have fallen sharply on hopes that one of the most disruptive energy crises in modern history may finally be coming to an end. Now, I've said it before, but I have found it very interesting over the past couple of months to see just how fickle the energy markets can be, basically grasping and clinging to any possible positive comment or sign. But according to a new report from Wall Street Journal, ending the crisis and recovering from it are two very different things. The Strait of Hormuz, of course, is one of the world's most important maritime choke points. As most know by now, roughly a fifth of the world's oil supply passes through the narrow waterway, connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea.
When the conflict kicked off and shipping through the strait was disrupted, the consequences rippled across the global economy. Oil production dropped, tankers were stranded, strategic reserves were tapped, and energy markets were thrown into turmoil. Well, now comes a difficult part, getting everything moving again. As of Monday morning, shipping traffic in and around the strait remained unusually quiet. Some crews told the Journal they had not yet received instructions to start engines or prepare for transit. Others reported that GPS signals, which had been disrupted during the conflict, had only recently returned. Even before the agreement was announced, however, traffic had begun to slowly recover. According to shipping data cited by the Journal, roughly 10 ships per day were passing through the strait during the first week of June. Now, that may sound encouraging until you compare it to normal conditions. Before the conflict, more than 100 vessels a day routinely transited the waterway. In other words, traffic is still operating at a fraction of its normal volume. And there's now a significant backlog. Hundreds of vessels have spent months sitting idle in warm Gulf waters. Some have been anchored in place for more than 100 days. And that has created a surprisingly mundane problem. According to ship brokers and crew members interviewed by the Journal, algae and barnacles have accumulated on many hulls, reducing speed and fuel efficiency. Some ships will require cleaning before they can return to normal operations. Then there's the question of insurance. War risk premiums surged during the conflict, of course, and remain elevated. Ship owners, insurers and cargo operators all want proof that the waterway is truly secure before returning to pre-war operating levels.
As one shipping executive put it, an extended ceasefire agreement is only the beginning of the recovery process. And even once ships begin moving freely, another challenge remains. The oil itself still has to reach market. Now this is where many observers misunderstand or just simply aren't aware of how energy systems work. Financial markets react immediately. Physical commodities, not so much. A tanker leaving the Persian Gulf today still requires weeks to reach its destination. The crude oil must then be offloaded, refined, processed and distributed before consumers see the benefit. According to estimates cited by the journal, meaningful supply relief may not begin appearing until late August, with broader normalization potentially taking until September.