Oil prices rise after attack on ships near Strait of Hormuz

DanielThomas,

Ben HattonAnd

Peter Hoskins

World oil prices have resurrected after at least three ships were attacked near the Strait of Hormuz, as Iran continues to launch strikes across the Middle East in response to ongoing attacks from the United States and Israel.

Two ships were hit and an “unknown projectile” was said to have “exploded near” a third, the British Maritime Trade Operations Center (UKMTO) said.

Iran has warned ships not to pass through the strait, which carries around 20% of the world’s oil and gas.

International shipping is almost paralyzed at the entrance to the strait, with analysts warning that a prolonged conflict could push energy prices even higher.

On Monday, at the start of the session in Asia, world oil prices jumped by more than 10% before slowing down in the morning.

At 0200 GMT, Brent crude was up more than 4% at $76.16 (£56.53) a barrel, while US-traded oil was also up around 4% at $69.67.

“The market is not panicking,” Saul Kavonic, head of energy research at MST Research, told the BBC.

“It is clearer that until now, oil transport and production infrastructure has not been a primary target for either party,” he added.

“The market will be watching for signs of a return of traffic through the Strait of Hormuz, which would lead to a further decline in oil prices.”

But some analysts warn that this amount could exceed $100 in the event of a prolonged conflict.

On Sunday, the OPEC+ group of oil-producing countries – which includes Saudi Arabia and Russia – agreed to increase production by 206,000 barrels per day to help cushion any price rises, but some experts doubt it would do much good.

Edmund King, president of the AA, warned that these disruptions could drive up gasoline prices around the world.

“The unrest and bombings in the Middle East will surely be a catalyst to disrupt the global distribution of oil, which will inevitably lead to higher prices,” he said.

“The magnitude and duration of pump price increases depends on the duration of the conflict.”

Iran’s Islamic Revolutionary Guard Corps (IRGC) said three British and American tankers were “hit by missiles and were on fire.” The United Kingdom and the United States did not comment.

The UKMTO said “multiple security incidents” had been reported in the Persian Gulf and Gulf of Oman, and advised ships to “transit with caution”.

At least 150 oil tankers have anchored in the open Gulf waters beyond the Strait of Hormuz, although a handful of Iranian and Chinese ships passed by today, according to ship tracking platform Kpler.

“Due to Iranian threats, the strait is effectively closed,” Homayoun Falakshahi of Kpler told BBC News.

“Ships have taken a precautionary measure not to enter because the risks are too high and their insurance costs have skyrocketed.”

He said the United States would likely try to protect shipping routes. which, if effective, would prevent a surge in oil prices, but if the strait remained closed for a long time, prices could go “much, much higher”.

The UKMTO said two vessels, which it did not identify, were hit by unknown projectiles, causing fires.

And an unknown project “exploded in the immediate vicinity” of a third, he said, adding that the ship’s crew, which he also did not identify, was safe.

A fourth incident in the area was also reported to the UKMTO, which it said involved the evacuation of the crew, but the cause is unclear.

Private maritime security company Vanguard Tech said incidents had been reported – which matched details provided by the UKMTO – involving vessels flying the flags of Gibraltar, Palau, the Marshall Islands and Liberia.

Danish container shipping group Maersk announced in a statement on Sunday that it would suspend its navigations in the Bab el-Mandeb Strait and the Suez Canal and redirect its ships around the Cape of Good Hope.

Iran and Israel launched new air attacks against each other on Sunday, after US-Israeli strikes killed Iranian Supreme Leader Ayatollah Ali Khamenei on Saturday and sparked retaliations against several Middle Eastern countries.

Strikes were reported in Dubai, the United Arab Emirates, Doha, the capital of Qatar, Bahrain and Kuwait.