An oil tanker run by BP Plc is being kept inside the Arabian
Gulf out of fear it could be seized by Iran in a tit-for-tat response to the seizure
by Gibraltar last week of a vessel hauling Iran’s crude, a report by Bloomberg
The British tanker was sailing toward the oil-rich city of Basra in southern Iraq, before making an abrupt u-turn on July 6. It’s now off Saudi Arabia’s coast. According to an informed source, BP is concerned that it could become a target if Iran seeks to retaliate for the seizure of Grace 1 near Gibraltar on July 4 by the British Royal Marines.
The decision by BP shows the impact on the oil tanker industry due to the rising tensions between Iran and the West. In the wake of the tanker seizure, Tehran’s foreign ministry said the incident was an act of piracy, while a former leader of Iran’s Revolutionary Guard said on Twitter that Iran should take a British tanker in response. Meanwhile, the US accused Iran of recent attacks on tankers just outside the Arabian Gulf.
“It’s a psychological game that’s being played,” said Olivier Jakob, managing director of energy consultant Petromatrix GmbH. “Nobody wants to be that one whose vessel is seized in a tit-for-tat.”
The overall oil market impact, according to Jakob, will probably be limited as Iran is unlikely to escalate the conflict beyond seizing one vessel in retaliation. He also added that companies will work hard to avoid being targeted.
Registered in the Isle of Man and flying under the British flag, the ship had been chartered by Royal Dutch Shell Plc to transport crude from Basra to northwestern Europe, tracking data and shipbrokers said. The ship did not collect that cargo, and the booking was canceled.
British Heritage won’t be able to exit the Strait of Hormuz, the choke point through which about a third of global seaborne oil moves, without sailing close to Iran’s coast, thereby placing it at greater risk.
Tensions between Iran and the UK may remain high until the legal issues surrounding the arrest in Gibraltar are smoothed out, Jakob said.
The issue could take months, said Anna Bradshaw, a partner at the law firm Peters & Peters, who specializes in sanctions.
Tensions have escalated since the US resumed sanctions on Iran, prompting the country to say it would enrich uranium in defiance of the 2015 nuclear deal that was meant to stop that from happening.
A report by Iran’s official IRNA news agency cited Behrouz Kamalvandi, the spokesman for the Atomic Energy Organization of Iran, on Monday as saying that Iran may choose to enrich uranium at a higher purity level as its next step in a new policy that’s gradually undoing the restrictions imposed by the global pact with world powers.
The escalation has heightened the risks for shipping companies exporting crude from the Arabian Gulf. Insurance costs for both tankers and their cargoes soared in the aftermath of the attacks, while some wary owners are now choosing to refuel elsewhere.