Tankers showing caution around Strait of Hormuz after attack on Iran

More tankers are reversing course away from the Strait of Hormuz as concerns rise on the possible closure of the vital choke point of trade.

Yui Torikata, senior liquid market analyst at industry data firm Kpler, said the situation is fluid.

The firm’s data is showing a notable event occurred between early Sunday and early Monday, when at least six vessels — two very large crude carriers, three chemical tankers, and one refined products carrier—diverted their courses away from the Strait of Hormuz.

The specific vessels identified are:

Damsgaard (Norway flag, departed from Pakistan’s Qasim port on June 20 and heading to Ruwais in Abu Dhabi)South Loyalty (Marshall Islands flag, departed from South Korea’s Ulsan port on May 14 heading to Basra in Iraq)Coswisdom Lake (Hong Kong flag, departed from Zhanjiang, China, on June 7 and heading to the United Arab Emirates’ Zirku)Kohzan Maru (U.K. flag, departed from Niigata port in Japan on May 29 and has no destination port call)Red Ruby (Panama flag, departed from the UAE area of Fujairah June 18 but has headed back to Fujairah anchorage)Marie C (Marshall Islands flag, departed from Fujairah anchorage on June 22 and is heading to Kuwait)

All vessels are in ballast, meaning they either are empty or carrying light loads.

“However, the situation has already evolved,” Torikata said. “As of this morning, three of those six vessels —the South Loyalty, Coswisdom Lake, and Damsgaard — have again changed direction and are now heading back towards the Strait of Hormuz. The other three vessels are currently idling off the coasts of Khor Fakkan and Muscat.”

“This specific weekend event should be seen in a broader context,” Torikata said. “In the immediate wake of the Israel-Iran conflict, the number of available empty [ballast] crude carriers within the Middle East Gulf zone fell to a record low, indicating significant reluctance from shipowners to enter the area. However, that trend has since reversed.”

“The count of available tankers recovered toward the weekend, and the number of crude carriers in the Gulf of Oman signaling their intent to enter the Mideast Gulf has also recovered from the low seen on June 16,” she added. “This suggests that, for now, the overall flow of vessels into the region is being sustained despite the recent, specific diversion event.”

The moves follow a U.S. attack Saturday on what have been identified as three major nuclear enrichment facilities in Iran.

Andy Lipow, president of Lipow Oil Associates, said the reports by the UK Maritime Trade Operations on widespread electronic interference and GPS jamming and location spoofing are adding to vessel owners’ worries.

Frontline tanker Front Eagle and dark fleet tanker Adalynn collided last week near the Strait of Hormuz. Following the collision, a fire on the deck of the Front Eagle erupted and was extinguished.

“Combined with increasing insurance costs, some owners will simply avoid the area — like Frontline,” Lipow said.

The tanker company recently said it would stop accepting new contracts to sail through the Strait of Hormuz.

“Other companies are likely to follow its lead,” shipping publication Lloyd’s List wrote in a recent report on the Frontline decision.

“This causes a de facto partial supply disruption if there is a lack of tankers to carry the oil that needs to be exported,” Lipow said.

“Some tanker owners may feel that China, who buys 90% of Iranian crude oil along with significant quantities of oil from the Middle East, is pressuring Iran not to disrupt shipping,” Lipow added. “While oil exports are Iran’s economic lifeline and it would not be in Iran’s interest to halt its own exports, if cornered, Iran might decide to inflict as much economic pain as it can on the rest of the world.”

Iran’s parliament voted on Sunday to block the Strait of Hormuz, according to a report from Iran’s state-owned Press TV that CNBC could not independently verify. A final decision rests with the country’s national security council.

British maritime security firm Ambrey issued an alert that five U.S.-affiliated merchant ships departed the Arabian/Persian Gulf since the U.S. military operations, and no ships publicly affiliated with the U.S. appear to have entered the area since the U.S. strikes. “Ambrey is aware of at least five merchant ships that were destined to enter the Arabian/Persian Gulf but about-turned or chose to wait,” it wrote.

Ambrey added that at least two of these ships did not have a public U.S.-affiliation, indicating broader concern in the market. Meanwhile, it noted several U.S.-flagged merchant ships that have gathered in UAE territorial seas. Ambrey’s view of the situation is that Iran is “almost certain to respond militarily to the U.S. strikes on nuclear facilities. This is likely to include attacks or seizures of US-affiliated shipping,” it wrote.

Lipow said the conflict could spark additional geopolitical instability.

“While China has condemned the United States attack on Iran, we have not seen China provide Iran with any kind of support other than words,” Lipow said. “Russian attacks Ukraine, the United States attacks Iran, now China may feel emboldened to attack Taiwan.”

Jakob Larsen, head of security at Bimco, the world’s largest direct-membership organization for shipowners, charterers, shipbrokers and agents, warned Iran could attempt a wider disruption of commercial shipping in the Strait of Hormuz through attacks on merchant ships. Anti-ship missiles or drones of both airborne and surface types could be used in these attacks, he said.

“The laying of sea mines would constitute another dangerous development, but Iran’s intent to do so is questionable due to the risk to Iran-affiliated commercial ships and the risk of environmental disaster in case a ship is damaged,” Larsen said.

The Strait of Hormuz, which connects the Persian Gulf to the Arabian Sea, is recognized as one of the world’s most important oil choke points. The inability of oil to traverse through, even temporarily, can ratchet up global energy prices, raise shipping costs and create significant supply delays.

In 2023, oil flows through the waterway averaged 20.9 million barrels per day, accounting for about 20% of global petroleum liquids consumption, according to the U.S. Energy Information Administration.

Hormuz handles less than 4% of global container trade, but the ports of Jebel Ali and Khor Fakkan in the UAE are critical intermediary points for global shipping networks in the region.

The majority of cargo volumes from those ports are destined for Dubai, which has become a hub for the movement of freight with feeder services in the Persian Gulf, South Asia and East Africa.

Correction: This article was updated to correct the spelling of the Strait of Hormuz.