Oil tanker CEO sees Hormuz ship traffic quickly increasing if U.S. and Iran reach a deal

Frontline CEO Lars Barstad said commercial shipping through the Strait of Hormuz could resume quickly if the U.S. and Iran reach a stable security agreement, though traffic is unlikely to return to the prewar level of 130-140 vessels per day. About 5 to 10 ships are currently transiting daily, while roughly 10% of the world’s largest tankers remain stuck in the Gulf loaded with up to 2 million barrels each. The article highlights major geopolitical risk, potential for a sharp rebound in tanker demand and freight rates, and possible tolls or sanctions-related complications if the strait reopens.

Analysis

The cleanest read is that this is less a binary oil-price story than a shipping-duration and fleet-allocation story. A modest reopening of Hormuz would first compress the war-risk premium in spot freight and quickly pull idle tonnage back into the basin, but that same re-anchoring of ships near the Gulf should tighten effective capacity elsewhere for weeks to months. In other words, even if headline tanker rates cool from panic levels, the re-routing unwind could keep asset utilization and period charter rates elevated longer than crude itself stays bid.

For Frontline specifically, the setup is asymmetric: it does not need a full normalization to monetize, only a partial reopening that restores transit confidence while the global fleet is still scrambled. The second-order risk is that the market may underappreciate how sticky repositioning is; once vessels are deployed to the Americas-to-Asia trade, the return lag creates a supply squeeze in the Middle East even after risk sentiment improves. That supports a multi-week to multi-month earnings tailwind for exposed tanker names, but only if the security downgrade persists long enough to overcome owners’ reluctance to chase a false start.

The contrarian angle is that the biggest upside for shippers could come from a messy, partial thaw rather than a clean peace dividend. A fee regime, “safe corridor” routing, or uneven enforcement would preserve friction, keep voyage times elevated, and sustain pricing power for owners while appearing superficially constructive for volumes. The market may be too focused on whether oil flows resume and not enough on the fact that any reopening still likely leaves the network structurally less efficient than pre-closure.

Key Decisions for Investors

• Long FRO on any intraday pullback tied to headline de-escalation for a 2-8 week trade; thesis is that freight and utilization remain elevated even if risk premia compress. Risk/reward: 2-3x if the reopening is partial and fleet repositioning remains tight; stop if transit volumes normalize faster than expected.
• Pair trade: long FRO / short XOM or CVX as a relative-value hedge against an overly fast unwind in crude while tanker economics stay strong. This isolates the shipping-capacity squeeze from the direction of oil prices.
• Buy FRO upside via calls 1-3 months out, ideally strikes just above spot, to capture an opening-scenario gap without taking full equity downside. Best if the market is still underpricing a rapid transit rebound.
• Avoid chasing pure crude beta until Hormuz volatility resolves; if you want geopolitical exposure, favor shipping over upstream energy because the second-order capacity dislocation can last longer than the first-order oil move.
• Set a tactical alert for a sustained downgrade in maritime threat assessments; that is the trigger for a fast re-pricing in tanker equities and the point where the trade should be reassessed for profit-taking.