Iran’s seizure of Greek tankers heightens risk on key oil route

Anthony Di Paola May 31, 2022

(Bloomberg) — Iran’s seizure of two Greek oil tankers in the Persian Gulf raises the risk of further interruptions to shipments from a region that’s a vital source of global energy supplies.

On Friday, Iran diverted two Greek tankers, each loaded with about 1 million barrels of oil, into its territorial waters -- an apparent tit-for-tat for a vessel that the European country seized. 

Greece is the world’s largest oil tanker-owning nation, making any spat with Iran potentially serious for the global market. Likewise, about one fifth of daily crude supply passes through the Strait of Hormuz, the narrow waterway separating the Persian Gulf from the Indian Ocean and crude buyers all over the world.

“Iran are approaching any seizure of their vessels or assets as a quid pro quo,” said Matt Stanley, a trader and broker with Starfuels in Dubai. “Shippers will need to be more vigilant. Iran will be extremely protective of any and all assets.”

Greece alerted all vessels from the country  to “to adapt to the unacceptable situation” when sailing in the Persian Gulf. About 27% of the global fleet of oil tankers is Greek owned, according to data from Clarkson Research Services Ltd., a unit of the world’s largest shipbroker.

Greek Move

The seized tankers, Prudent Warrior and Delta Poseidon, were taken by Iranian forces in the Persian Gulf on Friday, according to the US 5th Fleet in Bahrain. Both are Greek-owned and flagged, and had loaded cargoes in Iraq, according to tanker tracking data compiled by Bloomberg.

The Prudent Warrior had been sailed near the Iranian port of Bandar Abbas, just off the country’s coast, as of Monday afternoon, according to tanker tracking data compiled by Bloomberg.

Oil prices have surged by more than 50% this year, with Brent crude trading near $120 a barrel after Russia’s invasion of Ukraine roiled global markets for commodities and energy. 

Consumers were already suffering higher costs for fuels like natural gas and coal as supply shortages hit Europe and Asia during the winter months. With most of the world’s spare oil production capacity held by Gulf producers, the region is key for balancing markets.

The seizure of the vessels came not long after Greek authorities, in coordination with US counterparts, stopped an Iranian-flagged tanker and confiscated its cargo. 

Previous Incidents

The US has imposed wide-ranging sanctions on Iran’s economy and energy industry in an effort to force the Islamic republic to limit its nuclear program. Washington tightened those restrictions after four years ago exiting the 2015 nuclear deal, heightening a security crisis in the Persian Gulf that’s been characterized by reciprocal attacks and tanker seizures in the waterway.

The Persian Gulf nation held a British tanker for more than two months in 2019 after an Iranian oil tanker was blocked in Gibraltar. Both vessels were eventually released. Other British, Saudi and UAE-owned tankers have been accosted in and around Hormuz in the past several years, while Iranian vessels have been hit in the Red Sea.

Iran’s Islamic Revolutionary Guard Corps., or IRGC, said it was responsible for the seizures. It also warned other Greek vessels in the area, according to the semi-official Tasnim news agency. 

The IRGC indicated that 17 other Greek vessels in the Gulf could also be seized, said Tasnim, which is closely aligned to the Iranian military organization. Ship-tracking data compiled by Bloomberg showed 19 Greek-owned vessels in the Persian Gulf, including the two being held.

So far, shipbrokers say Greek tanker owners are not shying away from sending ships into the Persian Gulf. 

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