Brent crude futures (BZQ6) settled at $96.10 per barrel on Friday, up $1.34 or 1.4%, after U.S. Naval Forces Central Command announced the formalization of a convoy escort system for commercial tankers transiting the Strait of Hormuz. The system — designated 'Operation Watchful Channel' — replaces the ad-hoc escort regime that has been in place since hostilities began on Iran-conflict Day 1 (March 1). WTI crude (CLM6) closed at $92.84, up $1.21.
Under the new protocol, tankers must register with the Combined Maritime Forces Bahrain Operations Center at least 72 hours before transit and join scheduled convoys departing every six hours from designated rendezvous points off Khor Fakkan and the Musandam Peninsula. Fifth Fleet commander Vice Admiral George M. Wikoff said the system will 'meaningfully reduce single-vessel exposure while preserving freedom of navigation' — though shipping insurers warn it will compress effective Strait throughput by an estimated 12-18%.
War Risk Premium Reprices
Lloyd's of London war-risk premia for Strait of Hormuz transits rose to 0.85% of hull value Friday, up from 0.71% the prior week and from 0.04% pre-conflict. Tanker rates surged accordingly: VLCC TD3C Middle East Gulf to China spot rates climbed to Worldscale 142 from WS129, equivalent to roughly $122,000 per day on a round-trip basis. Frontline Plc (FRO) gained 4.6%, Euronav N.V. (CMBT) added 5.1%, International Seaways (INSW) rose 4.4%, and DHT Holdings (DHT) climbed 4.8%.
The Strait carries approximately 17.4 million barrels per day of crude and condensate plus 10.7 billion cubic feet per day of LNG — roughly 21% and 19% of global seaborne trade respectively. Traders estimate that a sustained 15% throughput compression would withhold 2.6 mbd from market, against an OPEC+ spare-capacity buffer of approximately 4.1 mbd. The Saudi-led OPEC+ delivered a 410,000 bpd production hike at the May 1 ministerial meeting.