Saudi state oil tanker company suspends shipments through Hormuz
Stoppage may restrict movements from the world’s largest crude exporter
Saudi Arabia’s state-backed oil tanker giant, Bahri, is temporarily suspending shipments through the Strait of Hormuz following Iranian missile strikes on US military bases in Iraq, according to two sources familiar with the matter.
The move, which follows a sharp increase in tensions in the region, may restrict oil shipments from the world’s largest crude exporter, as Saudi Arabia largely relies on its own tankers to move its oil. The majority of Saudi Arabian crude exports pass through the key waterway between the Gulf states and Iran, where around a fifth of global oil supplies pass every day.
One source familiar with Bahri said the shipments had been temporarily stopped as the kingdom assesses the threat in the aftermath of the missile strikes in the early hours of Wednesday morning. Bahri did not immediately respond to a request for comment. It is not clear when shipments might resume.
Oil tankers were attacked in the Gulf last year after the US reimposed sanctions on Iran’s energy exports, while Tehran has been blamed by the US for strikes targeting Saudi Arabia’s oil facilities in September, which briefly cut the kingdom’s oil output.
Oil prices spiked in the immediate aftermath of the missile strikes on Wednesday, with Brent crude rising more than 5 per cent to a high of $71.75 a barrel. Prices have since fallen back, however, to around $69 a barrel after the US did not launch an immediate response.
No US military personnel were killed in the strikes, leading some analysts to suggest Iran was looking to show a forceful response to the killing of commander Qassem Soleimani without triggering a broader escalation with the US. President Donald Trump’s first tweet after the attacks said “All is well!” highlighting that initial assessments suggested limited damage had been caused.
Iran’s foreign minister Javad Zarif described the attacks as “proportionate measures in self-defence” saying Tehran did not “seek escalation or war”.
Shipping brokers in London said they had heard of other tanker companies also putting restrictions on sailings through the Strait, with some limiting movements to daylight hours, but that they expected most oil shipments to continue for now.
“I think a lot of people are waiting to see if there is any attacks or direct involvement of tankers,” said Richard Matthews, head of research at Gibson shipbrokers. “Beyond the obvious heightened risk, most people are in wait-and-see mode. We haven’t seen a significant shift in tanker rates or insurance rates yet, but it is still very much early days.”
Saudi Arabia is able to export some oil from its Red Sea coastline by utilising a 750-mile long pipeline running from the oil-producing east of the country to the port city of Yanbu in the west.
The pipeline has capacity of around 5m barrels a day and Saudi Arabia has spoken in the past of expanding it, but the vast majority of the kingdom’s roughly 7m b/d of exports generally sail from the east of the country.
Bahri’s temporary suspension of shipping through Hormuz was first reported by the Wall Street Journal.