Will ships pay to pass through the Strait of Hormuz?

[0:00] Welcome to the Global News Podcast on YouTube. Hello, I'm Jeanette Jalil, and with me is our [0:04] world news correspondent, Joe Inwood. So Joe, let's talk today about the crucial oil and gas [0:10] route, the Strait of Hormuz, which has been blockaded by Iran since the war began more than [0:14] a month ago. Now, that's caused energy prices to surge, but in recent days, we have started to see [0:20] more ships getting through. Yeah, Jeanette, I think since the start of this, the phrase we've [0:25] used is a sort of a blockade or a closure of the strait, but actually that's not technically [0:29] accurate because a small number of ships have been getting through. What they all have in [0:34] common for the most part is that they are linked either to the Iranians, obviously, or to other [0:39] countries that are deemed to be non-hostile. So there's some connected to India, some connected [0:44] to Pakistan, some connected to Greece as well. Greece, of course, a huge player in the shipping [0:48] market, and of course, China, who are a big Iranian ally. So we are seeing small numbers get [0:55] through with reports that they're having to pay some sort of transit fee on occasion, [0:59] or that diplomatic leverage is being used in order to get them through. [1:02] And for the first time, a vessel linked to France got through this week. [1:06] Yeah, so this was a ship that is owned apparently by the French, although actually [1:10] registered to Panama. There's quite often you hear of big ships that are, of tankers that [1:17] fly under a foreign flag for various political or legal reasons. But yeah, there are reports that [1:22] one French ship has got through as well. Now, we should say we don't know the details. We don't [1:26] know how that was negotiated, whether it was a political decision. [1:29] Or whether there was some other sort of interaction that took place. But yes, there does seem [1:33] to have been one get through. [1:34] So let's talk about how these ships are getting through. Because some people are [1:39] saying that there's a kind of tollbooth system that's been set up by the Iranian regime. [1:44] What do we know about that? [1:45] Yeah, this is really extraordinary. So the suggestion is we don't we should say, [1:49] with a lot of this, it is you know, it's happening in the shadows. Clearly, people are not talking [1:53] about this publicly, mainly because the IRGC, the Revolutionary Guard, by many, many countries, [1:58] are designated as terrorist organization. There are lots of sanctions, both on Iranian oil and on [2:04] them as an organization. So people aren't doing this publicly. But the suggestion is that in order [2:08] to negotiate safe passage through the straits, what they're doing is they're paying some some [2:13] sort of intermediary company that deals with the IRGC, they give them something in the order of [2:18] $2 million is what's discussed. And that basically allows them to be escorted through the straits [2:24] close to the Iranian waterline. Again, we don't know if the the escorting is necessary, [2:28] because of the risk of sea mines. That's something that really I know, is a major concern for [2:33] shipping companies for other governments, the idea they might have mined the Strait of Hormuz. But by [2:38] paying this large amount of money, it seems that these ships are able to negotiate safe and free [2:44] passage. Now just to discuss the amounts here, 2 million is also the capacity in barrels of quite a [2:52] lot of these oil tankers. So what you're looking at is a situation where an oil tanker carrying 2 [2:57] million barrels of oil might have to pay for oil. [2:58] 2 million dollars sounds like a lot. But when you consider that the price of a barrel of oil has [3:05] gone up many, many more times than that, from sort of what 60 ish or so up to more than 100 points, [3:10] there are probably some shipping companies that are saying, Well, actually, we're not happy about [3:15] this. But it does probably make financial sense. And for many Western nations, in particular, [3:20] a tollbooth system just isn't acceptable, as you say, because of the sanctions and also because [3:25] of international law. [3:26] Yeah, so there was a meeting yesterday, [3:28] it was hosted by the UK, where the Foreign Secretary Yvette Cooper basically got 40 other [3:33] sort of like minded nations together. And they have rejected this as an idea. They basically [3:38] say it's a breach of international law, you're not allowed to do that. But you could imagine [3:42] that the Iranians who have said, we've had a huge amount of destruction done to our territory, [3:47] the Americans aren't going to pay the reparations that we seek, they might start to say, Well, [3:52] hang on a second, this is a way for us to recoup some of the costs that we've incurred. And if [3:58] international shipping has to pay $1 per barrel, well, international shipping and the international [4:03] oil industry can cope with that. I don't think that is going to be seen as acceptable by the [4:08] Western governments. But whether there's a big difference between whether they say, [4:11] we don't think this is acceptable, but then actually go well, you know, we can't do anything [4:16] about it. Because that's the main thing. Nobody else seems to be coming up with an alternative. [4:20] I mean, how to how to stop this partial blockade. Donald Trump has said repeatedly, just go in and [4:28] take it. It's easy. Well, the truth is, it's not easy, it's going to be incredibly difficult, [4:32] incredibly dangerous. You know, the the Iranians have got significant capacity to target this [4:39] shipping to lay landmines, they've got small fast ships, they've got naval drones. And I'm pretty [4:45] sure if you introduced a system whereby every single ship that was going through the Strait of [4:49] Hormuz had to have a naval escort and do so under the risk of fire, that would cost a lot more than [4:57] the kind of the [4:58] potential toll, I think might be the calculation that these companies and governments make. And so [5:04] it could be that they think, well, this is a price worth paying. Again, we just don't know at this [5:10] point, there would be all there'll be all sorts of problems about how that happens. As I said, [5:13] it would not be, you know, that it might invalidate their insurance, there are there, [5:17] there would be problems with making that sort of payment. And of course, [5:21] they could face repercussions for breaching American European sanctions. So it's really, [5:28] really complicated. But evidently, some carriers are saying that this might be something that's worth [5:35] doing for now. [5:35] And time is running out because even if the war ends today, the Strait of Hormuz could [5:40] effectively remain mostly blockaded. And if it does, that could have devastating [5:46] consequences for many poorer nations, particularly in Africa and Asia. [5:50] We're already seeing it. Just to use as an example, Pakistan, who I mentioned before, [5:54] and Pakistan are very much considered to be a kind of a friendly nation, [5:58] Iranians. They're the ones who've said they're happy to host talks. They're trying to convene [6:02] other influential regional states. They have just put up the price of their diesel by about 50%. [6:08] Now, that is going to have a devastating consequence for small businesses. I mean, [6:13] we've seen footage of row upon row upon row of, you know, blokes on motorbikes queuing up to get [6:20] petrol, only putting tiny bits in. You know, these are people who are not wealthy, do not have a huge [6:26] amount of disposable income and probably cannot take the idea that the cost of running their [6:29] motorbike has nearly doubled. So yeah, and of course, not just that, you've got fertiliser, [6:35] which is going to have a huge consequence for Africa. You've got jet fuel that's having a [6:38] global impact. You know, this is not just about oil and gas. It's about a huge range of things. [6:44] And as you say, that will have serious consequences for large parts of the world and the developing [6:48] world especially. And let's not forget the crews that are stuck on these ships have been stuck [6:54] there for weeks now. Some of them will be on board. Some of them will be on board. [6:56] Yeah, and there's thousands, tens of thousands maybe of people sitting on these ships, you know, [7:02] mostly young men, lots of them from the developing world, who are going to be trapped in increasingly [7:07] difficult positions. You know, we've got some, we've had some accounts sent into the BBC or some [7:12] work done by our colleagues online, talking to them, talking to the captains, talking to the [7:16] crews. And they paint an increasingly desperate picture. I mean, firstly, there's the concern [7:21] around being under fire. We have seen some tankers that have been hit, [7:26] that is, you know, that's a real risk. And it's really concerning and presumably very [7:29] stressful for them and for their families. But then also, how are they going to get resupplied? [7:36] They might have, you know, you don't travel with an infinite, you know, larder on your ship. [7:42] They're going to be down to a few weeks, maybe a couple of months worth of food. [7:45] We've heard talk about rationing, and of just an increasingly difficult and stressful and [7:51] potentially dangerous life for these people who, once again, this is, you know, we are not [7:57] talking about people who are, you know, living a life of luxury or wealthy people. These are, [8:01] you know, often, you know, poor working sailors from the developing world who have been forced [8:07] to endure really difficult situations as a consequence of a war that they had no part [8:12] in starting, but are the victims of. Thanks very much, Joe. That was the BBC's Joe Inwood, [8:17] joining me, Jeanette Jalil. And if you'd like to hear more from the Global News podcast, [8:22] please click the link below.