Iran escalates attacks on ships in Strait of Hormuz, threatening oil export recovery
Quick Look
- Iran's attacks on ships passing through the Strait of Hormuz have surged, and shipping industry figures have pointed out that cargo traffic may be slowing down.
- Although no changes in loading volumes of major oil-producing countries have been seen, the number of ship diversions or U-turns has increased, and ship-to-ship transfer waiting times have lengthened, indicating that the escalation of regional tensions may threaten the recent recovery of Persian Gulf oil exports.
AI-generated summary
Why It Matters
The Strait of Hormuz is a key global oil transportation channel, with an average of about 12 million barrels of crude oil passing through it every day. Iran has repeatedly used naval or paramilitary forces to attack ships passing through the strait in the past, especially escalating attacks during times of regional tension.
Iran's escalation of attacks on ships in the Strait of Hormuz may threaten the recent recovery of Persian Gulf oil exports. (Reuters photo)
[Financial Channel/Comprehensive Report] The surge in attacks on Iranian ships passing through the Strait of Hormuz may threaten the recent recovery of Persian Gulf oil exports.
"Bloomberg" reported that shipping industry insiders said there were signs that cargo traffic in the Strait of Hormuz was close to the water level in front of the station at the beginning of this month, but may be slowing down now. However, there are no signs yet of changes in loadings from several major oil producers, with one shipowner saying there appeared to be no restrictions on shipping through the Strait of Hormuz.
Please read on...
Escalating hostilities in the Middle East, where Saudi Arabia is under attack from a rebel youth movement in Yemen, pushed Brent crude above $106 a barrel on Monday, although prices eased slightly on Tuesday.
UK Maritime Trade Operations stated that on October 11, four oil tankers were attacked by UFOs in multiple independent incidents as they passed through the chokepoint. That was roughly double the average number of daily attacks the agency observed the previous week.
Ship operators are increasingly alert. Tanker tracking data compiled by Bloomberg show that more than a dozen supertankers and several Suezmax tankers either turned around or changed course when approaching Fujairah, an important shipping hub in the United Arab Emirates near the entrance to the Strait of Hormuz.
Some shipbrokers and some shipowners operating in the area described other signs of a slowdown in traffic, particularly longer wait times for ship-to-ship transfers. Ship-to-ship transfers, in which tankers assume the risk of crossing the Strait of Hormuz and then transfer the cargo to other vessels for eventual delivery to other buyers, play a key role in driving exports from the region.
Last week, before a new round of conflict escalated, Shell Chief Executive Wael Sawan estimated that oil flows in the Middle East had returned to about 80% of pre-war levels. Vitol Group CEO Russell Hardy said on the 6th that 12 million barrels of crude oil and 2 million barrels of fuel leave the Strait of Hormuz every day.
For much of Iran's war, ships passing through the waterway were targeted, with varying degrees of intensity. Large-scale attacks have caused brief declines in shipments in the past, but exports in the following days tended to make up for these declines.
A series of attacks by Iran briefly halted trade in the Strait of Hormuz in July, disrupting key trade to global markets and triggering price increases.
The head of Saudi Arabian Shipping Company said at the World Petroleum Council Energy Congress (WPC Energy Congress) on Tuesday (13th) that everyone now understands the importance of transportation, ships and the entire supply chain, and will show resilience at all costs. Despite the deadly youth movement's attack on Riyadh airport, industry events went ahead as scheduled, although top executives from many international oil companies canceled their attendance.
Grasp the economic pulse with one hand. Click here to subscribe to Free Finance Youtube Channel
What to Watch
AI outlook — possibilities, not facts
If Iran attacks continue, Brent crude oil prices could rise back above $100 a barrel in the next two weeks
Likely · Within weeks
International navies may increase patrol frequency in Strait of Hormuz to protect merchant shipping
Possible · Within weeks
Open Questions
- What is the specific target of Iran's attack?
- Will attacks continue to escalate or show signs of slowing down?
- Will the international community respond militarily or diplomatically?
- Will affected countries activate alternative transport routes?
