Japan Trade Chief Says Hormuz Off-Limits While War Rumbles On

The Strait of Hormuz is effectively off-limits to commercial shipping in the near term unless the US-Iran conflict can be resolved, the head of a major Japanese business lobby said on Wednesday.

(Bloomberg) — The Strait of Hormuz is effectively off-limits to commercial shipping in the near term unless the US-Iran conflict can be resolved, the head of a major Japanese business lobby said on Wednesday. Masahiro Okafuji, chair of the Japan Foreign Trade Council, said most vessels with a connection to Japan had exited the strait prior to the latest flare-up in hostilities.

For the time being, he added, ships were now likely to avoid the wider region, including the Red Sea. “No one would go there, because it’s dangerous,” Okafuji, who is also chief executive officer of major Japanese trading house Itochu Corp., said during a media conference in Tokyo. He didn’t specify whether he was referring to Japanese vessels or shipping in general.

The rerouting of vessels around the Cape of Good Hope would increase transportation costs by more than 30%, Okafuji added, without detailing particular routes. Traffic through Hormuz has slowed drastically in recent days, with only a handful of vessels braving transits as the US and Iran once more try to assert control over the strategic waterway. Both sides have launched strikes in recent days following a spate of Iranian attacks on shipping in the region.

The US has also reinstated a blockade on Iranian vessels moving to and from the county’s ports, while the Islamic Revolutionary Guard Corps said Hormuz and other routes would be closed until the US ends its attacks. President Donald Trump backed away from an earlier plan to impose a 20% charge on all cargo shipments through the strait. Separately, Okafuji said Japan’s trading houses were interested in the government’s recently announced growth strategy, which includes the development of overseas energy and natural resources.

He added, however, that the weak yen remains the biggest challenge to such investments. For Japan, the cost of overseas investments is now about 50% higher than it was previously, he said, adding that it would be difficult to realize the government’s vision without addressing the currency issue.