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Oil prices rally after Gulf of Oman tanker ‘attack’

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Two oil tankers in the Gulf of Oman have been attacked and their crews evacuated, according to reports on Thursday that sparked a 4 per cent surge in oil prices.

The US Navy said it was assisting two tankers in the Gulf of Oman after a “reported attack” that triggered another spike in anxiety over the risk of conflict in the Middle East.

The US’s Fifth Fleet, which is based in Bahrain, said US Navy ships were in the area and were “rendering assistance.”

Forty-four foreign crew members of the two tankers had been taken to Iran, said Iran’s Ports and Maritime Organisation on its website.

Brent oil prices rose as much as 4.5 per cent after the reports of attacks before slipping back. Brent was up 2.4 per cent at $61.40 in morning trade in London.

The incidents come as Shinzo Abe, Japan’s prime minister, is visiting Iran in a bid to reduce tensions between the Islamic republic and the US. Mr Abe met Ayatollah Ali Khamenei, Iran’s supreme leader and ultimate decision maker, on Thursday, and his trip has raised expectations that Tokyo could act as a mediator between Tehran and Washington.

Iranian media reported attacks on two oil tankers, saying successive explosions were heard in the Gulf of Oman. The UK Maritime Trade Operations said it was aware of an incident involving two vessels and that the UK and its partners were “currently investigating”, its website and an official in Dubai said.

Shipping executives were circulating messages on Thursday saying that oil tanker Front Altair had been abandoned, with its crew safely rescued by a nearby vessel. The messages said it was fully loaded and on fire.

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One of the messages said the blaze on the Front Altair was caused by a “surface attack”.

Hiroshige Seko, Japan’s trade minister, said he had received a report that two ships with Japan-related cargoes had been attacked.

The Kokuka Courageous belongs to Tokyo-based Kokuka Sangyo. In a press conference, the company said it had received a report that the vessel was hit by two shells, three hours apart. Company president Yutaka Katada said the ship had been abandoned and was adrift but all the crew were safe.

A company official said: “The first shell hit to the rear of the ship on the port side. A fire in the engine room was extinguished with carbon dioxide. The second shell then hit port amidships and the captain decided to evacuate.”

Front Altair was leaving the Gulf after loading at Ruwais in the UAE, while Kokuka Courageous had loaded at Jubail in Saudi Arabia.

The UAE and Saudi Arabia are staunch US allies that support the Trump administration’s efforts to pressure Tehran and push back against Iranian influence in the region.

Tensions were already running high between Iran and the US and its Arab allies following sabotage attacks on four tankers off the coast of the UAE last month. US officials said they suspected Iran was behind those attacks. A UAE investigation stopped short of blaming the Islamic republic, but said a “state actor” was responsible.

Those tankers were also in the Gulf of Oman, which is close to the Strait of Hormuz, one world’s busiest shipping routes and a choke point for crude exports out of the oil-rich region.

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Tehran has denied any involvement.

“This is very alarming,” said one London-based shipbroker. “After the last incident, in particular, you can see that it is more expensive to insure both cargo and vessels travelling in the region. It is likely this will be even more now.”

On Wednesday, a rocket fired by Yemen’s Houthis hit Abha airport in southern Saudi Arabia, injuring 26 people. Riyadh and Washington accuse Iran of smuggling arms to the Houthi rebels, including missiles fired at Saudi targets. Iran denies the allegations.

Tensions escalated dramatically last month after the Trump administration deployed an aircraft carrier strike group, B52 bombers and an additional 1,500 troops to the region, citing unspecified “escalatory” activity by Iran. Days later, the four tankers – including two Saudi vessels – were damaged in the sabotage attacks of the UAE’s coast. Houthi rebels also claimed responsibility for drone attacks on two Saudi oil pumping stations last month.

Both Iran and the US insist they do not want war. But diplomats fear that the rising tensions could lead to a “miscalculation” that would risk triggering a conflict.

Washington has been heaping intense pressure on Iran since Donald Trump last year unilaterally withdrew the US from the 2015 landmark nuclear agreement Tehran signed with world powers and imposed crippling sanctions on the republic.

Additional reporting by Michael Hunter in London



Via Financial Times

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