Gulf tanker incidents to raise shippers’ costs, cut traffic

In this picture taken on Tuesday, April 7, 2015, and released by the semi-official Fars News Agency, Iranian warship Alborz, foreground, prepares before leaving Iran's waters, at the Strait of Hormuz. (AP)
Updated 21 July 2019

Gulf tanker incidents to raise shippers’ costs, cut traffic

  • 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

WASHINGTON: 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 that 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, who is the 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.

FASTFACT

The British navy seized Iran’s Grace 1 tanker in Gibraltar on July 4 on suspicion of smuggling oil to Syria in breach of EU 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 percent to $62.47 a barrel on Friday, while benchmark US crude gained 0.6 percent 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.


Trump calls for World Bank to stop lending to China

Updated 22 sec ago

Trump calls for World Bank to stop lending to China

WASHINGTON: US President Donald Trump on Friday called for the World Bank to stop giving loans to China, one day after the institution adopted a lending plan to Beijing over Washington’s objections.
The World Bank on Thursday adopted a plan to aid China with $1 billion to $1.5 billion in low-interest loans annually through June 2025. The plan calls for lending to “gradually decline” from the previous five-year average of $1.8 billion.
“Why is the World Bank loaning money to China? Can this be possible? China has plenty of money, and if they don’t, they create it. STOP!” Trump wrote in a post on Twitter.
Spokespeople for the White House and the World Bank did not immediately respond to requests for comment.
The World Bank loaned China $1.3 billion in the fiscal 2019 year, which ended on June 30, a decrease from around $2.4 billion in fiscal 2017.
But the fall in the World Bank’s loans to China is not swift enough for the Trump administration, which has argued that Beijing is too wealthy for international aid.