US-Iran War: Shipping through the Strait of Hormuz has declined drastically amid the escalating tensions in West Asia. According to S&P Global Energy, since March 2, fewer than 10 vessels have been transitioning the strategic waterway daily, a sharp decline compared to a daily average of 135 ships in February.

The Strait, a critical chokepoint for the global energy market, typically handles 14.1 million barrels of crude oil and 5.4 million barrels of refined products daily. The recent blockade has left approximately 850 tankers stranded, impacting oil and gas loading and raising concerns about supply disruptions.

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Shipping Through Strait Of Hormuz Closure Declines Sharply

Crude shipments from the Middle East Gulf have fallen sharply in March, averaging just 7.4 million barrels per day, less than half of late February levels. According to S&P Global Energy, around 125 million barrels of crude are currently stranded in the Gulf, awaiting clearance to pass through the Strait of Hormuz.

&P Global Energy called the blockade a "seismic shock" to maritime transport and oil production, adding that even after a ceasefire, normalcy would take months to resume.

Crude oil supply disruptions have sent Asian refining companies' profits into negative territory, forcing them to cut operating costs to maintain profitability.

Benchmark Singapore crude refining margins, a key indicator of regional refining profitability, have fallen sharply from multi-year highs of $40-$45 per barrel in early March to negative of $5-$10 per barrel in recent sessions.

Indian refiners are also feeling the pinch. Industry sources said that Singapore's gross refining margins exclude freight costs, meaning actual losses for refiners could be significantly higher.

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Freight Charges Go Up Amid Middle East Conflict

Freight charges have jumped up to 842 per cent since tensions erupted in West Asia, with shipowners imposing additional fees. Rates for Aframax tankers, medium-sized crude oil carriers, have risen from $2.46 to $9.46 per barrel, while Suezmax vessel rates jumped from $1.87 to $9.90 per barrel.

Even Very Large Crude Carriers (VLCCs) have seen a sharp increase, from $0.97 to $9.18 per barrel.