DesPardes + PKonweb

Ship Sabotage in UAE: Gulf Oil Supply at Risk. ‘Dangerous Game Unfolding’

Dangerous game unfolding in the region. Tehran being blamed. Why would Iran do this now? Anyone else sees Mossad’s handiwork as Israel will be big gainer, tweeted Abbas Nasir, the former Editor Dawn and Exec Editor AsiaPacific, BBC World Service.

“IF God forbid there is a conflict in Iran, our country (Pakistan) will be the WORST affected,” tweeted Kamran Shafi.

DESPARDES News Monitor – Four commercial vessels were targeted by “acts of sabotage” near the territorial waters of the United Arab Emirates, the UAE foreign ministry said in a statement on Sunday, adding that there were no victims.

“The ministry stressed that exposing commercial ships to acts of sabotage and threatening the lives of their crews is a dangerous development, stressing the need for the international community to assume its responsibilities to prevent any parties trying to undermine the security and safety of maritime traffic,” the foreign ministry statement read.

Oil prices are rising as escalating tensions in the Middle East stoke fears about a global supply crunch, CNN reported.

Brent crude futures — the global benchmark — gained about 1.9% earlier on Monday to trade at $71.75 a barrel. US crude oil futures gained about 1.6% to $62.48. Both markets pared those gains later as the escalating US-China trade war clouded the outlook for global oil demand growth.

A senior source at Saudi Arabia’s ministry of energy told CNN Business that the attacks were particularly alarming because the tankers were targeted outside the Strait of Hormuz, with an estimated 20% of oil traded worldwide moving through the channel.

The US Energy Information Administration calls the Strait of Hormuz “the world’s most important oil transit chokepoint.” 

Saudi Arabia’s oil minister Khalid Al Falih condemned the “sabotage attack” on the vessels which included two of the kingdom’s oil tankers off the coast of Fujairah, near the world’s biggest crude shipping choke-point.

The tankers were on their way to cross into the Arabian Gulf, with one of them scheduled to load with Saudi crude oil from the port of Ras Tanura and delivered to Saudi Aramco’s customers in the US, Saudi Press Agency reported Monday, citing Falih.

While the attack didn’t lead to any casualties or oil spill, there was “significant damage” to both vessels, it said. SPA didn’t identify the ships involved or say who was responsible.

Fujairah is one of the world’s biggest bunkering hubs and lies outside of the Strait of Hormuz, where the UAE’s state-run oil company is building three underground storage caverns for crude.

Tensions have risen in the region since US waivers ended on Iran’s shipments of crude earlier in May and Iran said it would reduce its commitments to curb its nuclear program. Army helicopters were monitoring the area Monday morning, a Fujairah port source said. The US has reasserted its commitment to safeguarding shipping in the region in response to Iranian threats to disrupt Hormuz.

“The US and Iran have become entangled in a dangerous bout of threats and taunts that could potentially escalate into a military conflict,” John Driscoll, former oil trader and head of energy consultancy JTD Energy in Singapore, told Platts. “The temperature is rising with the resumption of Iran’s nuclear program.”

“If the incident is isolated, the market is likely to remain calm at this time of the year when global refining maintenance is reaching peak levels in May,” said Kang Wu, head of analytics, Asia, at S&P Global Platts. “As the driving season arrives, similar disruptions on a prolonged basis will have a much bigger impact down the road.”

An official from Iran’s foreign ministry, Seyyed Abbas Mousavi, expressed concern about the sabotage incident, according to Iran’s semi-official ISNA news agency. The Fujairah port source said port operations were “business as usual” and there were no increased security measures.

The UAE has a pipeline that it could divert crude to Fujairah in the event that Hormuz is blocked. The Habshan pipeline has a capacity of 1.5 million b/d, around half of the UAE’s total crude production.

“It’s the joint responsibility of the international community to protect the safety of maritime navigation and the security of oil tankers to avoid “adverse consequences of such incidents on energy markets, and the danger they pose to the global economy,”” SPA said.

“The precise means of attack or sabotage is unknown,” the US Maritime Administration alerted, and told vessels to exercise caution when transiting the area.