Two tanker owners suspend Gulf bookings as tension now ‘as high as it gets’

Fire and smoke billow from the Norwegian owned Front Altair tanker in the Gulf of Oman. (AFP)
Updated 13 June 2019

Two tanker owners suspend Gulf bookings as tension now ‘as high as it gets’

  • Within hours of the attacks on two oil tankers in the Gulf of Oman, tanker firms DHT Holdings and Heidmar said they had suspended new bookings to the Gulf
  • Shipping association BIMCO, which represents some 60 percent of the world’s merchant fleet, urged its members to ‘exercise extreme caution’ in the area

LONDON: At least two oil-tanker owners have suspended bookings to the Gulf following Thursday’s attacks in regional waterways, with one shipping analyst saying tension in the area “is now as high as it gets” short of an outright war.

Within hours of the attacks on two oil tankers in the Gulf of Oman, tanker firms DHT Holdings and Heidmar said they had suspended new bookings to the Gulf, Reuters reported.

Neither company responded to a request to comment but the news was confirmed to the agency by three ship brokers.

Shipping association BIMCO, which represents some 60 percent of the world’s merchant fleet, urged its members to “exercise extreme caution” in the area — but does not expect long-lasting disruption unless the situation escalates further.

“The tension in the Strait of Hormuz and the Arabian Gulf is now as high as it gets without being an actual armed conflict,” Peter Sand, chief shipping analyst at BIMCO, told Arab News.

“(We advise) our members to exercise extreme caution and instruct their vessels to take precautions … when operating in the area. Depending on the risk acceptance levels of (a particular shipping) company, and to the extent operations allow, it could be considered to instruct ships to avoid the area or keep as much distance as possible.”

Sand said it was understandable that some shipping companies had stopped bookings to the area but doubted whether others will follow.

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“Any attack on international shipping is one too many,” he said.

“This will likely cause ship owners and operators to ask for a premium on freight rates for trading in the area, as risk is now clear and present.

“While still being early hours to do a full and all covering assessment, BIMCO does not expect this to cause a massive and long lasting disruption to seaborne oil flowing out of (the Gulf) — unless this is only the beginning of an escalation of tension in the wider region.”

The Strait of Hormuz is the “No. 1 oil shipping chokepoint in the world,” Sand added.

Almost a fifth of the world’s oil passes through the Strait — some 17.2 million barrels per day — including crude from OPEC members Saudi Arabia, Iran, the UAE, Kuwait and Iraq.

Other governments and maritime agencies also urged caution for ships operating in the region.

The Norwegian Maritime Authority issued a warning to the country’s merchant fleet, advising ships to “exercise high care and alertness in the region,” AP reported.

“Although there is no full clarity in the background for these attacks, the Norwegian Maritime Directorate’s advice is to keep a good distance to Iranian waters based on today’s event,” the agency said.


Japan’s households tighten purse strings as sales tax and typhoon hit

Updated 06 December 2019

Japan’s households tighten purse strings as sales tax and typhoon hit

  • Falls in factory output, jobs and retail add to fears of worsening slowdown after Tokyo unveils $122bn stimulus package

TOKYO: Japanese households cut their spending for the first time in almost a year in October as a sales tax hike prompted consumers to rein in expenses and natural disasters disrupted business.

Household spending dropped 5.1 percent in October from a year earlier, government data showed on Friday.

It is the first fall in household spending in 11 months and the biggest fall since March 2016 when spending fell by 5.3 percent. It was also weaker than the median forecast for a 3 percent decline.

That marked a sharp reversal from the 9.5 percent jump in September, the fastest growth on record as consumers rushed to buy goods before the Oct. 1 sales tax hike from 8 percent to 10 percent.

“Not only is the sales tax hike hurting consumer spending but impacts from the typhoon also accelerated the decline in the spending,” said Taro Saito, executive research fellow at NLI Research Institute.

“We expect the economy overall and consumer spending will contract in the current quarter and then moderately pick up January-March, but such recovery won't be strong enough.”

Household spending fell by 4.6 percent in April 2014 when Japan last raised the sales tax to 8 percent from 5 percent. It took more than a year for the sector to return to growth.

Compared with the previous month, household spending fell 11.5 percent in October, the fastest drop since April 2014, a faster decline than the median 9.8 percent forecast.

Analysts said a powerful typhoon in October, which lashed swathes of Japan with heavy rain, also played a factor in the downbeat data. Some shops and restaurants closed during the storm and consumers stayed home.

Separate data also showed the weak state of the economy.

The index of coincident economic indicators, which consists of a range of data including factory output, employment and retail sales data, fell a preliminary 5.6 points to 94.8 in October from the previous month, the lowest reading since February 2013, the Cabinet Office said on Friday.

It was also the fastest pace of decline since March 2011, according to the data.

Real wages adjusted for inflation, meanwhile, edged up for a second straight month in October, but the higher levy and weak global economy raise worries about the prospect for consumer spending and the overall economy.

While the government has sought to offset the hit to consumers through vouchers and tax breaks, there are fears the higher tax could hurt an economy already feeling the pinch from global pressures.

Japan unveiled a $122 billion fiscal package on Thursday to support stalling growth and as policymakers look to sustain activity beyond the 2020 Tokyo Olympics.

A recent spate of weak data, such as exports and factory output, have raised worries about the risk of a sharper-than-expected slowdown. The economy grew by an annualized 0.2 percent in the third quarter, the weakest pace in a year.

Analysts expect the economy to shrink in the current quarter due to the sales tax hike.