The situation in the Persian Gulf
On 17 June, during a gala dinner in the Chateau de Versailles in France, President Donald Trump signed a memorandum of understanding with Iran. The Iranian president signed the same document remotely. But, on 7 July, hostilities resumed, bringing an early end to the 60-day truce originally envisaged. Since then, the situation has been very confused. The Iranian authorities are still blocking the Strait of Hormuz and the United States has re-established its blockade of Iranian ports. Negotiations are continuing but the Guardians of the Revolution insisted in early August that the strait would remain closed so long as the United States refused to accept their conditions. This enabled them to put pressure on the Trump administration as the mid-term elections approach. The ongoing stalemate in the Middle East, which has led to a long-term increase in oil prices, could penalise the president’s camp in the elections.
In early July, container traffic through the Bab el-Mandeb Strait increased steadily, in line with announcements from certain shipping companies, but it is not at all clear that the trend will be maintained over time. There will be no overnight normalisation of the situation and, for the time being, no one is considering sending fully loaded 24,000 TEU vessels through the Red Sea.
On virtually all continents, shipping is being penalised by low water levels. The situation is catastrophic on Europe’s inland waterways, notably the Rhine, the Danube, the Rhône and the Po. On the Rhine, carrying capacity has been drastically reduced and, on certain stretches, services have been halted completely. On the American continent, the Panama Canal has also begun a new phase of major restrictions, which is increasing prices for services using it. The Cape Horn route is likely to be used to a greater extent, even though this will increase the tonne-mile ratio and engender additional delays and costs.
Restrictions have also been announced on the Saint Lawrence in Canada and on the Amazon in Brazil. According to the latest forecasts from the Manaus Port Authority, restrictions on the movement of ships on the Amazon, close to Manaus in northern Brazil, should come into force in the second half of September as a result of low seasonal water levels.
For the major BCO (Beneficial Cargo Owner) shippers, long-term annual contract execution is in full flow. For the late signers, the annual negotiating round ended in late May and early June and, this year, there were a lot of them on account of geopolitical factors. Spot market rates established themselves at well above contract rates in the second quarter of 2026 (...)
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