Tuesday 22 October 2019

Fuelling fears: Price of oil surges after latest attack on Gulf tankers

Mystery: An oil tanker billows flames and smoke after it was attacked at the Gulf of Oman by an unknown enemy. Photo: Reuters
Mystery: An oil tanker billows flames and smoke after it was attacked at the Gulf of Oman by an unknown enemy. Photo: Reuters

Collin Eaton

Oil prices surged 2pc following a suspected attack on two tankers in the Gulf of Oman near Iran and the Strait of Hormuz, through which a fifth of global oil consumption passes.

The US blamed Iran in what it called a campaign of "escalating tensions" in a region crucial to global energy supplies.

US Secretary of State Mike Pompeo said its assessment of Iran's involvement was based in part on intelligence as well as the expertise needed for the operation.

"Taken as a whole these unprovoked attacks present a clear threat to international peace and security, a blatant assault on the freedom of navigation and an unacceptable campaign of escalating tension by Iran," Mr Pompeo said.

It stoked fears such attacks could become more widespread and affect oil flows from the Middle East, particularly if insurance companies begin to reduce coverage for voyages through the Strait of Hormuz and more shipping companies suspended trips to the region.

"These types of attacks have always been a concern," said Andy Lipow, an analyst at Lipow Oil Associates in Houston. "But the impact of tanker owners not chartering their vessels and insurance companies potentially refusing to provide coverage could further exacerbate the supply problem."

Oil tanker owners DHT Holdings and Heidmar suspended new bookings to the Mid-East Gulf, three ship brokers said.

"This is the second attack in a month's time," said John Kilduff, a partner at Again Capital LLC in New York. "It raises the ante for insurance risk."

Tensions in the Middle East have escalated since US President Donald Trump withdrew from a 2015 multinational nuclear pact with Iran and reimposed sanctions, notably targeting Tehran's oil exports.

Iran, which has distanced itself from the previous attacks, has said it would not be cowed by what it called psychological warfare.

Irish Independent

Today's news headlines, directly to your inbox every morning.

Editors Choice

Also in World News