Gulf tanker incidents may raise shippers’ costs, cut traffic

Business

In this May 2, 2013 photo the Liberian-flagged oil tanker Mesdar is seen at an unknown location. British Foreign Secretary Jeremy Hunt confirmed Friday July 19, 2019 that Iran had seized one British, the Stena Impero, and one Liberian-flagged vessel, Mesdar, in the Strait of Hormuz. It was the latest escalation of tension in the strategic waterway that has become a flashpoint in tensions between Tehran and the West. (John Pitcher via AP) MANDATORY CREDIT

Recent seizures and attacks aimed at oil tankers in the Strait of Hormuz will raise insurance rates for shipping companies and, if unchecked, reduce tanker traffic in the vital waterway, according to energy experts.

Britain’s foreign secretary said Iranian authorities on Friday seized two ships, one flying under the British flag, the other registered in Liberia. The events occurred in a passageway that carries one-fifth of the world’s crude exports.

“If this kind of problem continues, you might see people start to shy away from the (Persian) Gulf or try to reflag — not be a British tanker,” said energy economist Michael Lynch.

The near-term impact will fall most heavily on the shipping industry in the form of higher insurance rates, said Lynch, president of Strategic Energy & Economic Research Inc.

Richard Nephew, a Columbia University researcher who wrote a book on sanctions, also believes the tanker seizures could create “a real risk premium” for companies that operate in the Gulf and insurers that underwrite them.

“Certainly we’ve seen concern with this in the past on sanctions grounds, and I would imagine security groups would be a far more complicating element,” Nephew said.

On Friday, Iran’s Revolutionary Guard said it took the British tanker Stena Impero to an Iranian port because it allegedly violated international shipping regulations. An Iranian news agency said the Liberian-flagged Mesdar was briefly detained and then released after being told to comply with environmental rules.

The seizures marked a sharp escalation of tension in the region that began rising when the Trump administration withdrew from a 2015 nuclear deal with Iran and imposed severe restrictions on Iranian oil exports and other sanctions.

Many of the 2,000 companies operating ships in the region have ordered their vessels to transit the Strait of Hormuz only during the daylight hours and at high speed. But only a handful of the companies have halted bookings.

The tensions in the Gulf also pushed oil prices slightly higher. Brent crude, the international standard, rose 0.9% to $62.47 a barrel on Friday, while benchmark U.S. crude gained 0.6% to settle at $55.63.

There’s a long history of shippers enduring threats in the region.

“There have always been little problems around the Gulf where people will say, ‘You’re in our territorial waters,’ but usually that doesn’t go so far as the seizure of tankers,” Lynch said.

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Miss

Win a trip to see Mel Robbins
Join the Pro Football Challenge
On the Trail: VR/360º
Bailey's Bites: On The Road
Sunday Morning Matters
MedWatch Today
Hispanic Heritage
CBS47 On Your Side
Bulldog Insider: The Podcast
The Valley's Armenia

CBS47 On Your Side

Do you have a problem that you need help solving? Contact Investigative Reporter Erik Rosales and let him be

On Your Side.

Email erikrosales@cbsfresno.com

Images from Armenia

Small patients in Armenia
Yerevan by night.
Dr. Jeff Thomas delivers.
Dr. Jeff Thomas delivers in Gyumri.
Doctors unpack medical supplies from The Central Valley.
Fresno Medical Mission at work.
Medical Supplies being unloaded.
Fresno Medical Mission at the ready.
KSEE24 crew witnesses the miracle of life in Gyumri, Armenia.
Life saving work of Central Valley surgeons in Armenia.
Ribbon cutting on new surgical center in Ashtarak Armenia. Fresno donors made this dream come true.
KSEE24 on assignment with the Fresno Medical Mission
Honorary Consulate to Armenia Berj Apkarian explains the crisis facing one hospital.
KSEE24's Stefani Booroojian and Kevin Mahan at the meeting with President Bako Sahakyan.
Medical Meeting in Artsakh.
The President of Artsakh meets with the Fresno Medical Mission.
Learning modern medicine techniques with the Fresno Medical Mission in surgery.
Leaning in for a look. Dr. Brien Tonkinson holds class and helps a patient in Armenia.
Fresno Medical Mission cares on one of the smallest patients in the region. Six-year old Yanna receives life-changing better breathing surgery.