Strait of Hormuz shipping nearly halts, transits plunge 66.2% in a week

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Strait of Hormuz Traffic Grinds to Halt as U.S.-Iran Peace Deal Unravels

With the U.S.-Iran interim peace agreement effectively in tatters, shipping through the Strait of Hormuz has once again ground to a virtual halt.

Shipping traffic fell to a three-week low on July 16, with transits down to eight vessels from 15 the previous day, according to data from maritime intelligence firm Kpler. Total transits were down 66.2% for the week of July 14–20 compared with the previous seven-day period, data from Lloyd’s List Intelligence showed.

Recent Iranian attacks on ships and the reinstatement of a U.S. blockade on Iran-linked shipping prompted most vessels to stop or reverse course. An average of 138 ships passed through the Strait each day before the conflict began on February 28, according to the Joint Maritime Information Centre.

“With the recent events, everything has changed,” said Dimitris Maniatis, CEO of Athens-headquartered maritime risk management company Marisks, during a Lloyd’s List Intelligence briefing last week. “We’ve gone back to the worst-case scenario. Nobody is willing to move.”

The traffic separation scheme—the traditional shipping lane through the middle of the Strait—remains too hazardous for vessels due to the ongoing threat of mines, commented Jakob Larsen, chief security officer at BIMCO, one of the world’s largest shipping associations.

Escalation and Blockade Risks

The escalation in fighting comes as the U.S. and Iran remain at odds over how shipping through the Strait of Hormuz should resume under the memorandum of understanding signed on June 17. While Tehran pledged to guarantee normal transit, the agreement did not specify which shipping lanes vessels should use.

On July 20, the Houthis, an Iran-backed Yemeni group, announced it was imposing a maritime blockade on Saudi Arabia in response to what the group says is the kingdom’s siege on Yemen’s capital, Sana’a. The announcement compounds mounting risks to oil supplies from the Middle East.

A full closure of the Bab el-Mandeb Strait, the southern gateway to the Red Sea, would halt Saudi oil exports to Asia and could reduce global oil supply by 7%. The kingdom diverted its oil supplies to the key Red Sea port of Yanbu following the outbreak of the war, with those exports rising to a record 4.19 million barrels a day last month.

Proposed Solutions and Public Sentiment

Last week, Oxford Economics published a research note stating that a toll system would be a less costly alternative to persistent disruption and would ensure regular trade could resume through the strategic waterway. It estimates that both Iran and Oman could raise $6.8 billion a year by imposing transit fees on oil tankers passing through the Strait of Hormuz.

An article in The Economist cites polling by The Washington Post and Ipsos that shows conflict in Iran is now less popular than the Vietnam War among the American public.

Melissa Hancock

As ever, thanks for reading, and do keep in touch with your thoughts and ideas: see you next week.

melissa.hancock@fortune.com

Saudi EV Maker Lucid Enlists AlixPartners to Outmanoeuvre Losses

Lucid Motors, the Saudi-backed maker of electric vehicles, has hired U.S. restructuring advisor AlixPartners to improve execution and strengthen operations.

In a statement posted on LinkedIn last week, Lucid’s CEO, Silvio Napoli, dismissed an earlier report that its board was considering filing for bankruptcy or pursuing a transaction to take the company private.

“Lucid has sufficient liquidity to fund its operations well into next year,” said Napoli, who was appointed CEO on June 1. “My priority is clear: Turn this company around.”

Financial Position and Draws on Credit

Lucid, which is majority-owned by Saudi Arabia’s $1 trillion sovereign wealth fund, the Public Investment Fund (PIF), ended 2025 with about $4.6 billion in total liquidity, according to its most recent filings.

On July 6, Lucid drew $800 million from an existing credit line with PIF, tapping its Saudi backer for the second time this year after an initial $500 million draw on April 1. This leaves roughly $1.2 billion of the approximately $2.5 billion line undrawn.

Operational Challenges and Workforce Cuts

The Nasdaq-listed, embattled EV maker has been struggling to boost profitability amid softening demand for higher-priced electric vehicles and is looking to Saudi Arabia to drive its economic growth.

In May, the company suspended its 2026 production outlook, with its net loss widening to $1.13 billion in the first quarter as a supplier-related issue disrupted deliveries of its Gravity SUV in February. It has cut its U.S. workforce twice this year, reducing headcount by 12% in February before eliminating a further 18% on June 22 at its Arizona factory.

Just 48 hours later, it hired veteran Ford executive Kel Kearns as senior operations director for AMP-2, its plant in Saudi Arabia's King Abdullah Economic City, where production of the Cosmos—its lowest-priced model, starting at about $50,000—is due to begin by the end of 2026.

Needham & Company analyst Ch