Despite the fact that the US and Iran seem keen on avoiding further conflict, oil and gas shipowners are preparing to pay a price from the tension that was created after the rocket strikes in Iraq over the last week.
According to Bloomberg the costs of oil tankers are rapidly increasing, following the US’s sanctions against Chinese companies accusing them of hauling Iranian crude. The rates for vessels hauling 2 million-barrel cargoes of Middle East oil to Asia rose to 19%; Meanwhile, the cost to transmit US crude to Asia on supertankers increased by 6.3% to $8.5 million on Thursday, as Bloomberg reports.
Bahri, the Saudi-based transportation giant, experienced a decreased net income to SR224.9 million in the first half of 2019, affected by the shipping crisis in the region. CEO, Abdullah Aldubaikhi commented that ‘The financial results achieved for the first half of 2019 reflect the difficulties that the region is going through, which impacted the whole maritime shipping industry.’
About two months after the White House banned the purchase of Iranian oil, tankers are offloading millions of barrels of Iranian oil at Chinese ports, resulting to piles of cargoes. Bloomberg reports that the store of oil could lead to a push down of global prices, in the possibility that Chinese refiners decide to draw on it.
Reuters reports that the recent attacks around the Strait of Hormuz and the Gulf of Oman have increased insurance costs resulting to the decrease of purchases of marine fuels in the UAE Fujairah oil hub, as shippers are trying to mitigate their time in the Middle East.
CMA CGM informed that after considering the recent incidents in the Strait of Hormuz and the related significantly increasing insurance costs in the Middle East Gulf region, it decided to implement a War Risk Surcharge. The War Risk Surcharge will apply from July 5th, 2019.
A wider conflict between the US and Iran would be negative for most types of ships and for the oil markets in general, as fewer ships will transit the Straits of Hormuz, said VesselsValue in its latest analysis, following tensions on the aftermath of the recent tanker attacks in the Gulf of Oman.
Oil prices increased as tensions remain high between Iran and the US. What is more, the US Secretary of State Mike Pompeo talked about significant sanctions against Iran, which could be announced soon. Brent futures were up 25 cents, an increase of 0.4%, reaching $65.45 a barrel. In addition, West Texas Intermediate crude was up 37 cents, or 0.6%, at $57.80 a barrel.
In November 2018, the US government issued Significant Reduction Exemptions (SREs) waivers to eight countries that were committed to decreasing the purchase of Iranian oil; China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey.
According to Bloomberg, US President Donald Trump provided an executive order banning the purchase of Iranian iron, steel, aluminum and copper, worsening the tensions with the Islamic Republic a day after he declared he may begin enriching uranium again in two months.
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