Iranian Deputy Foreign Minister: Strait Of Hormuz Remains Open

Iranian Deputy Foreign Minister Saeed Khatibzadeh recently stated in an interview that the Strait of Hormuz "remains open," clarifying that civilian vessels can pass through safely with guidance and consent from Iranian authorities - a critical clarification amid escalating geopolitical tensions in the Middle East. This announcement carries profound implications for global steel exports, as the Strait of Hormuz is not only a vital artery for oil and liquefied natural gas (LNG) shipments but also a key maritime corridor for steel products and their raw materials, linking major steel exporters and importers across Asia, the Middle East, and beyond.

As the only sea channel connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea, the Strait of Hormuz handles approximately 20% of global oil supply and serves as a crucial route for commodity trade, including steel and its raw materials such as iron ore and steel billets.

For steel exports, this strait is particularly critical for two key reasons:

• first, it enables the movement of finished steel products (such as hot-rolled coil, seamless steel pipes, and structural steel) from major exporters like China to Gulf Cooperation Council (GCC) countries, which rely heavily on imported steel for infrastructure, construction, and oil and gas projects.

• Second, it facilitates the transport of Iranian steel billet and slab exports, which averaged 250,000 tonnes per month in 2024 and are vital to downstream steel production in regions like Europe.

Prior to the recent tensions, the Middle East accounted for 14% of China's total finished steel exports by volume, with GCC countries absorbing roughly 19% of China's hot-rolled coil (HRC) exports - a high-value segment critical to the region's industrial and infrastructure development. Any disruption to the strait's directly threatens these trade flows, as alternative routes are cost-prohibitive and significantly delay shipments.

Khatibzadeh's confirmation that the strait remains open - albeit with the requirement for vessels to coordinate with Iranian authorities - offers a degree of relief to the global steel industry, which has grappled with severe disruptions since February 2026, when escalating conflicts between Iran, Israel, and the U.S. effectively halted most shipping through the strait. The immediate implications of this announcement for steel exports are multifaceted:

1. Easing Supply Chain Disruptions for Key Exporters and Importers

In the weeks prior to the statement, Chinese steel exporters had suspended new offers to Gulf buyers, as freight rates spiked by 20-33% (or $10 per tonne), war-risk insurance became unavailable, and vessels were either diverted or stranded offshore. China's steel exports to the Middle East plummeted from 120,000 tonnes to 30,000 tonnes in the first four months of 2026, a direct result of strait-related disruptions. With the strait confirmed as open, Chinese mills and exporters may gradually resume offers to GCC markets, though the requirement for Iranian consent and ongoing geopolitical risks will likely keep logistics costs elevated.

For Gulf importers (such as Saudi Arabia, the UAE, and Qatar), the announcement provides much-needed clarity, as their construction and oil and gas projects - which depend on imported steel pipes, structural steel, and OCTG (oil country tubular goods) - had faced delays due to supply shortages. Similarly, Iranian steel exports, which had been paralyzed by the strait's de facto closure and the congestion at Iran's Bandar Abbas port (where 1.3 million tonnes of steel and raw materials were stranded by March 2026), may begin to recover, albeit slowly.

2. Mitigating Price Volatility, But Risks Persist

Prolonged disruptions to the Strait of Hormuz had raised fears of heightened volatility in global steel prices, driven by supply chain bottlenecks, rising freight costs, and uncertainty over raw material availability. The deputy foreign minister's statement helps mitigate these risks by restoring some predictability to shipping routes. However, the "conditional" nature of the strait's openness - requiring Iranian approval and potentially involving tolls of up to $2 million per vessel - means that logistics costs will remain above pre-tension levels, creating a "Hormuz premium" for steel exports to and from the region.

Additionally, the threat of renewed closure looms large: Khatibzadeh emphasized that the strait's openness is contingent on the absence of hostile actions and compliance with Iranian demands, including a ceasefire in Lebanon. Any escalation in tensions could once again disrupt shipping, leaving steel exporters and importers vulnerable to sudden supply shocks.

3. Reshaping Regional Steel Trade Dynamics

While the strait's reopening offers relief, the prolonged disruptions have already begun to reshape regional steel trade dynamics. Indian steel pipe manufacturers, for example, have emerged as alternative suppliers to GCC countries, filling the gap left by Chinese exporters unable to navigate the strait's risks. This shift may persist even as the strait reopens, as Gulf buyers seek to diversify their supply chains to avoid future disruptions. For Iranian steel exporters, the opportunity to rebuild market share will depend on their ability to navigate the conditional requirements and compete with alternative suppliers.

Beyond the immediate relief, Khatibzadeh's statement underscores the fragility of global steel supply chains that rely on the Strait of Hormuz. For steel exporters and importers, several long-term considerations emerge:

• Diversification of Shipping Routes: Major steel exporters, particularly China, may accelerate efforts to diversify their shipping routes to the Middle East, such as using ports in Oman (e.g., Fujairah) that bypass the Strait of Hormuz, though these routes are often more costly and time-consuming.

• Supply Chain Resilience: Steel buyers in the Middle East are likely to prioritize suppliers with robust logistics planning and alternative routing options, shifting the focus from price alone to supply chain reliability.

• Geopolitical Risk Management: The conditional nature of the strait's openness means that steel market participants must closely monitor geopolitical developments in the Middle East, as any shift in tensions could disrupt trade flows. This includes factoring in extended lead times and higher insurance costs into their business plans.

The Iranian Deputy Foreign Minister's confirmation that the Strait of Hormuz remains open is a critical development for global steel exports, offering much-needed relief to a sector grappling with severe supply chain disruptions. While the announcement eases immediate pressures on exporters and importers, the conditional nature of the strait's - coupled with ongoing geopolitical tensions - means that uncertainty will persist.

For the steel industry, the key takeaway is the need to build greater resilience in supply chains, diversify shipping routes, and closely monitor developments in the Middle East to navigate the risks and opportunities presented by this pivotal maritime chokepoint.