- U.S.-bound Saudi tanker hit by ‘sabotage’ on way to load oil off the United Arab Emirates coast on May 12.
- Two of the targeted tankers were registered in Saudi Arabia, one was flagged in the U.A.E. and the other in Norway.
- Antagonism between the U.S. and Iran intensified this month after President Trump ended exceptions to U.S. sanctions on Iranian oil sales.
- Saudi Arabia’s Tadawul All Share Index retreated 1.8%, and shares of Bahri, the kingdom’s biggest owner of oil tankers, dipped as much as 4.1% to their lowest value since 2013.
- U.S. has warned ships that Iran or its proxies could be targeting maritime traffic in the region as America is deploying an aircraft carrier and B-52 bombers to the Persian Gulf.
Based on an article published by Bloomberg, two of Saudi Arabia’s oil tankers were attacked while sailing toward the Persian Gulf, adding to regional tensions as the U.S. increases pressure on Iran.
Tankers sabotaged
The tankers were damaged in “a sabotage attack” off the United Arab Emirates coast on Sunday, state-run Saudi Press Agency reported. The vessels were approaching the Strait of Hormuz, the world’s most important chokepoint for oil shipments.
The U.A.E. foreign ministry on Sunday reported an attack on four commercial ships. No one has claimed responsibility. Two of the targeted tankers were registered in Saudi Arabia, one was flagged in the U.A.E. and the other in Norway, according to a U.A.E. government official.
Reason remains unclear
The precise nature of the incident remained unclear — neither Saudi Arabia nor the U.A.E. said exactly what happened or identified potential culprits. The U.S. deployed an aircraft carrier, bomber planes, and defense missiles to the region last week amid worsening friction with Iran, Saudi Arabia’s regional rival. U.A.E. stock markets posted their steepest decline in more than three years.
Saudi Energy Minister Khalid Al-Falih said the incident aims “to undermine the freedom of maritime navigation, and the security of oil supplies to consumers all over the world,” according to SPA. He urged the international community to ensure the security of oil tankers “to mitigate against the adverse consequences of such incidents on energy markets, and the danger they pose to the global economy.”
Friction intensifies between the U.S. and Iran
Antagonism between the U.S. and Iran intensified this month after President Trump ended exceptions to U.S. sanctions on Iranian oil sales. The Islamic Republic has threatened to block oil shipments through the Strait of Hormuz if the U.S. halts Iranian energy exports and to scale back its obligations under the 2015 nuclear deal.
Crude Rises
Iran’s Foreign Ministry Spokesman Abbas Mousavi described the maritime incident as “concerning and regrettable” and called for efforts to shed light on what exactly happened, the semi-official Tasnim News reported. He warned against “foreign seditious plots to upset the region’s security and stability.”
Global crude benchmark Brent for July settlement rose as much as $1.38 on Monday to $72 a barrel on the London-based ICE Futures Europe exchange. Oil had been losing ground since late last month on signs that Saudi Arabia would pump more to make up for lost Iranian barrels and a looming trade war between the world’s two largest economies, the U.S. and China.
Rising geopolitical tension has also weighed on stock markets in the Gulf this week. Dubai’s benchmark dropped 4%, the most among major gauges tracked by Bloomberg globally. Saudi Arabia’s Tadawul All Share Index retreated 1.8%, and shares of Bahri, the kingdom’s biggest owner of oil tankers, dipped as much as 4.1% to their lowest value since 2013. Bahri owns the two Saudi tankers, according to data compiled by Bloomberg.
Tanker War
The U.A.E.’s foreign ministry said it’s investigating the tanker incident with local and international parties. No one was hurt, and no fuel or chemicals were spilled, the state-run WAM news agency quoted the ministry as saying. One of the two Saudi tankers was on its way to the port of Ras Tanura to load oil for shipment to the U.S., according to SPA.
The targeted vessels were the Amjad, Al Marzoqah, A. Michel and Andrea Victory, according to the U.A.E. government official.
Attacks on oil tankers in the turbulent Gulf have been rare since 1991. Saudi Arabia continued shipping through the Strait of Hormuz during the so-called tanker war, a phase of the 1981-88 conflict between Iraq and Iran when both foes attacked vessels in the Gulf. Oil exports flowed also during the first Gulf War in 1990-91.
The U.S issues a severe warning
Emirati officials have declined to elaborate on the nature of the sabotage or say who might have been responsible. However, the reports come as the U.S. has warned ships that “Iran or its proxies” could be targeting maritime traffic in the region, and as America is deploying an aircraft carrier and B-52 bombers to the Persian Gulf to counter alleged threats from Tehran.
Tensions have risen in the year since President Donald Trump withdrew the United States from the 2015 nuclear deal between Iran and world powers, restoring American sanctions that have pushed Iran’s economy into crisis. Last week, Iran warned it would begin enriching uranium at higher levels in 60 days if world powers failed to negotiate new terms for the deal.
It remains unclear if the previous warning from the U.S. Maritime Administration is the same perceived threat that prompted the White House to order the USS Abraham Lincoln aircraft carrier strike group and B-52 bombers to the region on May 4.
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Source: Bloomberg
