Cargo and tanker ship crews trapped, stranded by Strait of Hormuz closure | 60 Minutes
In a Nutshell
Iran's closure of the Strait of Hormuz amid war with the US and Israel has stranded ~20,000 crew members on 700 ships, including 400 oil tankers holding 200 million barrels, halting 95% of normal traffic and spiking US gas prices by 65 cents/gallon—the fastest rise in 20 years. Despite US strikes rendering Iran's navy ineffective and destroying mine layers, shipping firms like Hapag refuse to proceed without guaranteed safety, as Iranian attacks have killed 8 crew and damaged vessels, while Iran boosts its own oil exports to China. Experts warn no quick policy fixes exist beyond reopening the strait, with US offers of insurance and escorts dismissed as insufficient amid ongoing threats.
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As the war enters its third week, US military officials say 6,000 Iranian military targets have been struck, including ballistic missile sites and air defense systems. Iran's navy has been rendered combat ineffective. Iran maintains its stranglehold over the Strait of Hormuz, the only route connecting oil-rich countries in the Persian Gulf to the rest of the world. It is a crucial 21-mile wide waterway for a fifth of the world's oil. Normally, 130 commercial ships pass through it every day. On February 28th, when Israeli and American jets began dropping bombs on Iran and Iran retaliated, those ships ground to a halt, spiking American gas prices. This is an unprecedented closure of one of the world's most vital choke points.
An estimated 20,000 crew members are stranded and under attack in the Strait of Hormuz. On Wednesday, a Thai cargo ship was struck by a projectile from Iran, setting the ship on fire and trapping members of the crew. It is one of the few ships that has attempted to cross since the start of the war. Most others have been at a standstill in the waters surrounding the strait, with constant sound of drones and attacks.
Captain Zilka Lee Kuster from her operation center in Hamburg, Germany, oversees a 300-vessel fleet for the German shipping giant Hapag. Hundreds if not thousands of ships are hovering outside the Strait of Hormuz.
At what point did you look at the situation out there and say, "It's too dangerous. These ships should not sail through this strait." That was very early and very quickly. Iran already said that they would attack any vessel that is passing through the Strait of Hormuz and this was the moment when we called off.
Six of her cargo ships carrying furniture, electronics, clothing were headed toward the strait as the war broke out. They heard this message from Iran's Revolutionary Guard, broadcast over their ship radios:
Attention all ships. Attention all ships. From now on, all navigating through the Strait of Hormuz is forbidden.
Captain Lee Kuster ordered her crew not to proceed. Today, 150 men sit trapped as the war rages around them. They saw drones flying by, explosions close to the port, a lot of smoke. Roughly 700 ships are currently sitting in the Persian Gulf, including 400 oil tankers holding 200 million barrels of oil, enough to fuel Japan for 2 months.
Captain Lee Kuster and her team keep watch day and night. Those orange dots are their ships. The men on board have been ordered to stay below deck as much as possible. Communication with crews is constant but sometimes difficult because satellite phones are interfered with.
Her biggest fear is what happened to other ships, like two oil tankers off the coast of Iraq struck by Iranian explosives and set ablaze in the Persian Gulf. One was American-owned. Crews had to be rescued by boat. The next day, scorched vessels were seen drifting. Since the war started, there have been 16 confirmed attacks on ships in and around the Persian Gulf. Iran has claimed responsibility for several. At least eight crew members have been killed.
Matt Smith, oil market analyst for Kepler which tracks global trade and shipping, made a time-lapse showing ship traffic before the war: on a normal day, about 100 ships pass through. When bombing started, it dropped to 70, then to the teens on Sunday, and since then just one or two tankers per day. All those red and green arrows represent oil tankers that haven't moved for the past 2 weeks. It is a very expensive parking lot. The few ships that have moved are mostly Iranian, like Hilda loaded with 2 million barrels of Iranian crude heading to China.
Iran has exported daily 100,000 more barrels of oil than before the war, most to China. Nine Iranian oil tankers have traveled through by turning off transponders. On Thursday, on Iran state TV, the first public statement from the country's new supreme leader was read:
The leverage of blocking the Strait of Hormuz must continue.
Choke point understates it. This is the mother of all choke points. Imagine your heart has one artery taking that lifeblood to the rest of your body and that is what the Strait of Hormuz is.
Bob McNair was an energy adviser to President George W. Bush during the Iraq war and now advises clients on oil and gas markets. Last year, his team predicted that if unmolested, Iran would make Hormuz unsafe.
Would you have advised President Bush to go through with these strikes? Yes, I believe what President Trump is doing in terms of defanging the Iranian regime is principled, courageous, and correct. Totally support the goal. If I were advising him on how to achieve the goal, I would emphasize the need to manage the oil and gas market implications. And that means making sure from day one we are attacking Iran's ability to do what it has done for some 12 days now and may apparently do for an entire month.
In the United States, gas prices have increased by more than 65 cents per gallon since the war began, the fastest weekly spike in 20 years. The all-time high was $5 per gallon average in summer 2022 after Russia invaded Ukraine. If Hormuz is not opened soon, new records could be set. Cost of jet and diesel fuel has risen 25%, leading to higher plane tickets and grocery prices.
The gasoline price is set in a global oil market. A supply disruption anywhere leads to a price spike everywhere. Food is grown and transported by oil, so price increases pass to consumers. What happens at the Strait of Hormuz affects the entire supply chain.
President Trump said:
The Straits are in great shape. We've knocked out all of their boats. They have some missiles, but not very many. I think we're in very good shape.
Despite this, most ships remain too wary to cross. US Central Command took out 30 mine layers, boats believed to be used by Iran to deploy mines in shipping lanes. The president said the US would help cover the cost of risk insurance and suggested US Navy escorts, though unclear when as Navy is busy fighting. Captain Lee Kuster is still not letting her ships move.
Would more insurance help? You cannot insure the life of a seafarer. So more insurance would not necessarily help. We rather have to have escort. Has a US Navy escort been offered? No.
The Trump administration announced it will temporarily lift sanctions on Russian oil. 32 countries, including the US, plan to release 400 million barrels from strategic reserves, taking at least three months.
I've worked in the White House during an energy crisis. There are no policy solutions to a prolonged closure of the Strait of Hormuz. You open up the toolkit and the options range from marginal through symbolic to deeply unwise. Escorts are a sideshow. Strategic stock releases are a sideshow. Gas tax holiday, sideshow. You got to restore the flow of the Strait of Hormuz.
Even if President Trump declared an end to the war tomorrow, no guarantee Iran would open it. Iran just needs to demonstrate ability to attack ships.
Two days after interview, one of Captain Lee Kuster's six cargo ships stuck in the Persian Gulf was struck off a port near Dubai, caught fire, no crew injured.
What needs to happen for you to get on the radio to your crews and say go, it's safe? We would need really an end of this escalation so that there are no drones, no missiles, no whatsoever flying and that there's a clear message from everyone that they will stop.
Yesterday, President Trump called on other countries, including China, to send ships to help secure the Strait of Hormuz:
This should have always been a team effort.
This morning, Iran's foreign minister said its military decides which countries are allowed to pass through the strait.
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