Concern as island-linked tankers ‘attacked’
After two oil tankers with links to Bermuda were apparently attacked in the Gulf of Oman yesterday, a shipping expert has expressed growing concern.
He warned that freight rates and prices related to some commercial marine insurance could spike if blast incidents involving tankers in the region continue.
A month ago, four tankers in the same area were damaged in what has been described as a “sophisticated and co-ordinated operation”.
In separate incidents yesterday the Front Altair, a tanker owned by Bermudian-headquartered Frontline, and the Kokuka Courageous, a tanker operated by Bernhard Schulte Shipmanagement, which has an office in Bermuda, were damaged by explosions that caused the evacuation of their crew members.
It is not clear what caused the blasts. However, Mike Pompeo, US Secretary of State, said: “It is the assessment of the United States Government that the Islamic Republic of Iran is responsible for the attacks that occurred in the Gulf of Oman today.”
A senior Iranian official told the BBC that Iran has no connection with the incident. Iran said it helped rescue the crew members affected.
The Kokuka Courageouswas reported to have a breach of its hull above the waterline. The Panama-flagged tanker is operated by Bernhard Schulte Shipmanagement Singapore, and was transporting methanol from Saudi Arabia to Singapore.
Although not directly involved, Jens Alers, group director of Hamilton-based Bernhard Schulte Shipmanagement (Bermuda), expressed concern at the incident in the Strait of Hormuz.
“If this happens more often, the so-called war insurance rates go through the roof. You will then have an enormous increase in the cost of freight, especially out of the gulf,” he said.
The Joint War Committee, which comprises underwriting representatives from Lloyd's and IUA markets who write marine hull war business in the London market, has the Strait of Hormuz listed as an area of “perceived enhanced risk”. This is due to enmity between Iran and Saudi Arabia, which are on opposite shores of the waterway, and tensions between the US and Iran.
Neil Roberts, of JWC, said the enhanced risk listing means underwriters now require ships entering the Gulf to notify them, and “insurers then have the opportunity to assess the specific vessel and voyage and may change terms and conditions accordingly”.
Meanwhile, Mr Alers wondered what would happen if the Strait of Hormuz is closed.
“All these kind of questions pop up when tensions rise,” he said.
“That area is not a war zone, but if it is declared a war zone, and it is a hot war zone because ships actually get attacked there, then rates will go up.”
He said if the Straits of Hormuz were closed it would impact about 30 per cent of the world's oil that is transported in and around the region.
“It would cause a dramatic spike in oil prices if they were to do that.”
When asked about concern the latest incident will cause for the shipping industry, Mr Alers said: “In the context of last month, there was no need to evacuate the crews. These attacks must have been at a level that caused the captains to immediately abandon ship.
“If this happens more often, no one will want to go there, or there will be extremely high freight rate.
“There is no trend line yet, but we have now had six ships attacked in four weeks.”
Frontline's Front Altair, suffered three explosions yesterday and was on fire. The tanker was said to have been carrying 75,000 tonnes of the petrochemical product naphtha.
Robert Hvide Macleod, Frontline Management's chief executive officer, told shipping newspaper TradeWinds: “We don't know the reason for the explosion and work to clarify through thorough investigations.”
The Royal Gazette was unable to reach the Norwegian company's management offices in Oslo, and no details were available from its Hamilton office, or an operations branch in Glasgow, Scotland.
The Marshall Islands-flagged tanker was being chartered by Taiwan's state oil refiner CPC. It was off the coast of Fujairah, in the United Arab Emirates, when the incident occurred.
The United Kingdom Maritime Trade Operations, which is part of the Royal Navy, said it was aware of the incident involving the two tankers and is was advising ships moving through the area to exercise extreme caution.