Iran's Deputy Foreign Minister stated that certain countries' vessels are permitted to pass through the Strait of Hormuz and that no mines have been laid in those waters—what benefits does this bring to the global energy market?

What actually exploded first in recent days was maritime insurance—not oil prices themselves. According to Reuters, war-risk hull insurance premiums for vessels operating near the Strait of Hormuz surged from roughly 0.25% to as high as 3%, meaning an additional several million dollars per voyage for a $200–300 million vessel. This premium spike better reflects the market’s pricing of the fear of ‘physical inaccessibility’ than spot oil prices do [1]. In such a narrow waterway, what truly prevents tankers from passing is not only military threats but also the highly concentrated marine insurance and reinsurance system—maritime insurance operates by its own logic. War risk must be insured separately; losses arising from war are covered exclusively under war-risk policies, with standard coverage offering no protection. Once a region is designated a high-risk zone, surcharges escalate sharply; if reinsurers deem their exposure overly concentrated, they may even hit the brakes entirely, cutting off new underwriting capacity [2]. At that point, even if the strait remains nominally open, shipowners may choose to halt operations or wait—due to inability to obtain, unaffordability of, or reluctance to purchase war-risk insurance—pushing the strait into a state of ‘de facto contraction.’ Iran’s signal—confirming no mine-laying and permitting partial passage—weakens insurers’ greatest fear: an uncontrollable, protracted closure scenario. Once markets believe the Strait of Hormuz has not entered a long-term disruption mode involving mining, sweeping, and escorted reopening, surcharges, port congestion costs, and shipowners’ reluctance to sail will all ease at the margin. In other words, this news helps the global energy market reprice a potential total shutdown as ‘high-cost—but still navigable.’ For refineries, traders, and end buyers, this is a highly tangible benefit [3]. A second benefit: LNG receives a marginal boost—potentially greater than crude oil. An easily overlooked point is that natural gas has proven more vulnerable than crude oil in this round of disruption. Crude oil can draw on strategic reserves—IKE has already agreed to release a record 400 million barrels—but LNG relies far more heavily on real-time shipping, spot-market allocation, and terminal slot turnover. At least 20 LNG carriers have recently been stranded in the Gulf, pushing daily charter rates from under $98,000 to over $200,000; Asia and Europe are competing fiercely for cargoes—even U.S. LNG originally destined for Belgium has rerouted to Tianjin [4]. [Liquefied natural gas (LNG) is not impossible to store strategically—but doing so is extremely difficult, prohibitively expensive, and unsuitable for long-term containment. LNG must be stored at ultra-low temperatures, and over time generates boil-off gas (BOG), resulting in inevitable losses. Thus, compared to crude oil, LNG functions better as a ‘short-term reserve’ for seasonal or commercial turnover—not as a multi-year strategic stockpile.] According to earlier Caixin reports, approximately 20% of global LNG trade passes through the Strait of Hormuz—most of it originating from Qatar. Data show that in 2025, the United States, Qatar, and Australia together supplied over 60% of global LNG exports—with Qatar alone accounting for nearly 20% of global LNG exports [5].

First-ever transit of a Qatari LNG vessel through the Strait of Hormuz

The weather in Shanghai was excellent over the weekend. On Saturday, I met up with friends for market discussions and continued tracking some investment research themes. We’ve consistently discussed natural gas, sulfur, chemical fertilizers, food, and coal with you—because, beyond crude oil and gold, these are sectors undergoing profound structural shifts. Some of these positions remain on the left side—still awaiting entry—while others have already been initiated and are now riding right-tail trends. The underlying logic has long been explained, so we won’t repeat it this week. Instead, here are some marginal updates: A Qatari LNG vessel successfully transited the Strait of Hormuz for the first time on May 9—an event certain to cause short-term market volatility. Maritime traffic data for May 9: A liquefied natural gas carrier loaded cargo at Ras Laffan Port and traversed the strait along the Qeshm–Larak Island route, bound for Port Qasim in Pakistan. This marks Qatar’s first seaborne LNG export since the outbreak of conflict. Previously, an empty Omani vessel passed through on April 3; ADNOC’s ‘Mubarak’—a UAE-flagged LNG carrier—reportedly succeeded on April 28, en route to China and expected to arrive around May 15. But the Qatari vessel carries distinct significance: Qatar accounts for ~20% of global LNG supply, and multiple prior attempts had ended in turnarounds. This successful transit is therefore highly consequential—even though the Middle East remains volatile, ‘conditional passage’ may become increasingly common. Qatar’s resumption of exports is undoubtedly bearish for short-term sentiment across the value chain, given rising supply. Yet the medium-term supply deficit remains structurally rigid. Global natural gas supply remains unresolved: As previously noted in our analyses, Qatar suffered permanent loss of ~17% of its LNG production capacity—a complex industrial asset whose full recovery typically takes 3–5 years. Meanwhile, Australia’s export capacity remains impaired following severe cyclone damage in March. With summer approaching, major European and Asian players are about to begin replenishing inventories. Short-term disruptions will not alter this underlying trend—natural gas price floors will continue lifting. During our livestream, we mentioned possibly initiating positions in agricultural commodities—this naturally follows from the same chain of reasoning. And indeed, developments this week confirm that. On May 7, the UN Food and Agriculture Organization (FAO) issued an official warning. FAO Director-General Qu Dongyu stated bluntly: ‘Fertilizer shortages triggered by the Strait of Hormuz blockade will lead to reduced crop yields in the second half of 2026 and throughout 2027.’ He emphasized strongly: ‘This crisis has already transcended geopolitical boundaries—it is striking at the core of the global agrifood system.’ This is the FAO’s highest-level public warning to date. Per FAO’s latest data, global wheat output in 2026 is projected to decline by ~2% year-on-year. Farmers are shifting toward crops requiring less fertilizer. Russia’s IKAR has downgraded its wheat export forecast—from 46 million tons to 44.5 million tons. Global fertilizer supply chains have been severely disrupted—and recovery will take far longer than just a few months. De-escalation in the Middle East affects only short-term sentiment—not the medium-term structural shortage in chemicals and fertilizers. I also reviewed broker research and found something interesting: Most brokers describe the agriculture sector as currently exhibiting ‘option-like’ portfolio characteristics. What does that mean? Downside risk is limited—both valuation and earnings have hit bottoms—while upside potential hinges entirely on whether external catalysts materialize. CITIC Securities puts it plainly: The energy crisis supports agricultural commodity prices via dual channels—cost transmission and demand substitution.

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