Risk levels associated with shipping crude oil and LNG via the Strait of Hormuz, the Middle East’s key shipping artery, have escalated sharply, inflating tanker costs in the region. US Secretary of State Mike Pompeo said Thursday that the Front Altair and the Kokuka Courageous tankers were hit by “unprovoked attacks” from Iran just a month after similar attacks on pipelines in Saudi Arabia and on ships in nearby waters off Fujairah.
Pompeo said the US — which has deployed warships and military aircraft to the region to counter Iranian threats to close the Strait of Hormuz — would raise the attack with the United Nations’ Security Council. Fatih Birol, the head of the International Energy Agency, said Friday the attacks represent a major concern for global energy security, adding that the agency stands ready to respond if oil supplies are disrupted.
**A large number of shipowners were not accepting bookings for Middle East cargoes on Friday, citing a lack of clarity on safety after Thursday’s attacks in the Gulf of Oman, Singapore-based shipbrokers and Asian market sources said.
**Shipowners said war risk premiums must be charged to the charterer, indicating that risk appetite for Middle East loadings varied widely.
**China, India and South Korea are the biggest buyers of the heavier, sourer crudes that Middle East producers tend to supply.
**Some shipowners were hesitant to call at the strategic oil port of Fujairah, while others said that calling at Persian Gulf ports had not been ruled out and there were always some vessels willing to take the risk.
**Singapore-based shipbrokers said the move will likely not have an immediate impact on crude flows as charterers are not in urgent need of vessels and crude supply was ample.
**The strait is also crucial for LNG shipments from Qatar, which exported about 6.6 million mt in April, about 23.5% of global LNG supply, according to Platts Analytics.
**Qatar supplied some 2.8 million mt to Europe, representing about 40% of its total exports, with most of the remaining 3.8 million mt heading to Asia.
**Current LNG demand is subdued on limited appetite in Europe and Asia for power generation and restocking following a mild winter which has left healthy storage inventories.