Iraq is granted exemptions, and ships from France and Japan pass in succession, with traffic through the Strait of Hormuz reaching the highest level since the war.

AI x Iraq Exemption: Can it really unlock the shipment of 3 million barrels of oil per day?

There are clear signs of easing in the blockade of the Strait of Hormuz. Iran announced it would grant Iraq a transit waiver; French container ships and Japanese LPG tankers completed the crossing one after another. By Friday, the seven-day rolling average number of vessels transiting the Strait of Hormuz had reached the highest level since the outbreak of the Iran-U.S. conflict at the end of February.

The latest major variable comes from the Iraq waiver announcement. In a video statement posted by Iran’s military spokesman on the state news agency Islamic Republic News Agency (IRNA), he said that “brotherly Iraq” is exempt from any restrictions imposed by Iran on the Strait of Hormuz, adding that the relevant restrictions apply only to “hostile countries.” If the waiver is implemented, in theory it could release up to 3 million barrels per day in Iraq’s oil freight volume.

Despite transit volumes gradually rebounding, questions remain about whether the arrangement can last. It is unclear whether the Iraq waiver applies to all Iraqi oil freight and whether it can be enforced effectively. Iraqi officials have also warned that the practical effect of the waiver will depend on whether shipping companies are willing to take the risk of entering the strait to pick up cargo.

Iraq waiver: Potentially freeing up 3 million barrels per day

On April 5 local time, in a video statement posted by Iran’s military spokesman on the Islamic Republic News Agency (IRNA), he said that “brotherly Iraq” is exempt from any restrictions imposed by Iran on the Strait of Hormuz, and that the relevant restrictions apply only to “hostile countries.”

Iran’s control over the Strait of Hormuz is one of its most important bargaining chips in the current conflict. This waiver statement represents the largest degree of easing Iran has made so far on transit arrangements.

On a theoretical level, the waiver would have major impact—since Iraq is one of the world’s major oil producers, its daily output involves an export scale of up to 3 million barrels.

However, an Iraqi official is cautious about the matter, pointing out that whether the waiver can truly work hinges on whether international shipping companies are willing to send ships into the strait. It is still unclear whether the scope of the waiver covers all Iraqi oil, or only vessels flying the Iraqi flag, and the enforcement mechanism also needs to be clarified.

French and Japanese ships break through first; transit volume hits a new high since the war

Previously, the overwhelming majority of vessels that successfully passed through the strait came from countries considered friendly to Iran. The transit of French and Japanese ships signals a first break from this pattern.

According to Bloomberg data, since early last Friday, a total of 13 ships have completed transits, including 10 sailing out of the Persian Gulf and 3 entering from international waters. Among the departing ships are 5 bulk carriers, 1 product tanker, and 4 liquefied petroleum gas (LPG) tankers.

China Central Television (CCTV) News, citing a report from Japan’s commercial shipping company Mitsui, said that a liquefied petroleum gas tanker operated by its affiliated company had passed through the Strait of Hormuz before April 4 Japan time—marking the second Japan-related ship known to have left the gulf since the blockade. The French container ship CMA CGM Kribi then sailed out of the strait last Friday, becoming the first ship known to be linked to Western Europe and to complete a transit since the outbreak of the war.

Turkey’s Minister of Transport and Infrastructure, Abdulkadir Uraloğlu, said that since the conflict began, a total of 15 ships owned by Turkish shipowners have been stranded near the strait; the first received Iran’s permission to pass in mid-March, and the second completed transit recently.

These transits occurred after French President Macron called for a ceasefire and emphasized the need to reopen the strait. However, it is still unclear whether these transits are the result of government-level diplomatic efforts, or arrangements reached through temporary commercial negotiations by companies and their intermediaries.

Fees in five tiers; north-south routes diverge

Behind the gradual recovery in transit volume, an Iran-led transit mechanism is taking shape.

Citing people familiar with the matter, The Paper reports that Iran’s Islamic Revolutionary Guard Corps has begun charging “tolls” to transiting vessels and has established a five-level tiered system based on relationships by country: the friendlier a country is to Iran, the more favorable the conditions; those viewed as hostile face risks ranging from threats to attacks. Generally, tanker transit-toll negotiations start at about $1 per barrel, paid in RMB or stablecoins. Pakistan has agreed on bilateral deals for safe transit.

Navigation routes are also diverging. Most of the early transiting ships took the northbound route close to Iran’s coastline—i.e., the route through the waterways between Iran’s Larak Island and Qeshm Island. But more recently, another path has emerged: ships travel along Oman’s coastline, then take the waterway south of the Strait of Hormuz to head east. Sohar, an LPG carrier owned by the Sohar-based joint venture in which Mitsui holds 50%, as well as two other supertankers, are all using this southern route.

At the mechanism level, Iran is drafting an agreement with Oman to implement joint monitoring and coordination of navigation through the Strait of Hormuz. However, Oman has not clearly stated its position so far.

Uncertainty remains; whether the arrangement can be sustained needs validation

Even though transit volumes continue to rebound, the market remains cautious about whether current progress can evolve into a stable arrangement.

Vessel-tracking data show that Sohar is currently in waters near Muscat. After changing its destination to Oman’s Qalhat LNG export terminal, the ship apparently has not carried cargo; it had been idling in the Persian Gulf for more than a month beforehand.

French and Japanese transits differ from the earlier pattern dominated by vessels from countries friendly to Iran. Whether that means a substantive breakthrough on the diplomatic front remains unclear to all parties. Bloomberg data show that even with the current transit volume rising to a new high since the war, its scale is still marginal compared with pre-war levels—normally, about one-fifth of the world’s oil and liquefied natural gas passes through the strait each day.

Against the backdrop of ongoing hostilities and diverging statements among parties, whether the Iraq waiver will actually materialize and deliver, whether the French and Japanese transits can become a norm, and whether the Iran-led charging mechanism can gain broader acceptance remain the core variables closely watched by the energy market.