BP Oil Tanker Shelters in Persian Gulf on Fear of Iran Retaliation
By Kelly Gilblom and Serene Cheong
An oil tanker run by BP Plc is being kept inside the Persian Gulf in fear it could be seized by Iran in a tit-for-tat response to the arrest by Gibraltar last week of a vessel hauling the Islamic Republic’s crude.
The British Heritage, able to haul about 1 million barrels of oil, was sailing toward Iraq’s Basrah terminal in the south of country when it made an abrupt u-turn on July 6. It’s now off Saudi Arabia’s coast and a person with knowledge of the matter says BP’s concern is that it could become a target if Iran seeks to retaliate for the seizure near Gibraltar—by British Royal Marines—of the tanker Grace 1 on July 4.
BP’s decision shows how rising tensions between Iran and the west are having an impact on the oil tanker industry that’s vital to the global trade in crude. Tehran’s foreign ministry said the arrest of Grace 1 was an act of piracy and a former leader of Iran’s Revolutionary Guard said on Twitter the Islamic Republic should take a British tanker in response. The U.S. accused Iran of recent attacks on tankers just outside the Persian 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 will probably be limited because Iran is unlikely to escalate the conflict beyond seizing one vessel in retaliation, he said, adding that companies will work hard to avoid being targeted.
The ship, registered in the Isle of Man and flying under the British flag, had been chartered by Royal Dutch Shell Plc to transport crude from Basrah to northwest Europe, tracking data and shipbrokers said. It didn’t collect that cargo and the booking was canceled.
British Heritage won’t be able to exit the Strait of Hormuz, the chokepoint through which about a third of global seaborne oil moves, without sailing close to Iran’s coast, thereby placing it at greater risk.
Legal Issues
Tensions between Iran and the U.K. may remain high until the legal issues surrounding the arrest in Gibraltar are smoothed out, Jakob said. That could take months, according to Anna Bradshaw, a partner at the law firm Peters & Peters, who specializes in sanctions.
Tensions have escalated since the U.S. resumed sanctions on Iran, prompting the country to say it would enrich uranium in defiance of a global pact that was meant to stop that from happening.
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 a 2015 nuclear pact with world powers, the official Islamic Republic News Agency reported on Monday, citing Behrouz Kamalvandi, the spokesman for the Atomic Energy Organization of Iran.
The escalation has heightened the risks for shipping companies exporting crude from the Persian Gulf, a region responsible for about one third of all seaborne petroleum supplies. 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.
Photo: BP
