(Bloomberg) -- Shipping in the Middle East is getting ever riskier, with a standoff between the U.K. navy and Iran just the latest in a line of incidents in the region over the past few months.
Though Iran’s attempts to block the passage of BP (LON:BP) Plc’s British Heritage oil tanker were ultimately thwarted by the U.K. Navy, they highlight a growing trend of disruptions to shipping in the region. Two tankers were sabotaged in the region last month, while four were struck in May.
Iran’s Revolutionary Guard Corps warned on Wednesday that it would “reciprocate” for the seizure last week of a vessel hauling its crude by Gibraltarian officials and British Royal Marines. The threat all adds to a growing sense that disruptions to maritime trade are set to continue near a choke point that accounts for one third of all seaborne petroleum.
“Iran will focus on retaliation towards U.K. assets,” says Olivier Jakob, managing director of consultant Petromatrix GmbH. “As far as escalation, I don’t know how far they want to escalate it, but they can do it just to be a nuisance.”
The confrontation was reported by the British government. Tehran said it didn’t happen.
British Protection
The British Heritage is registered in the Isle of Man, a British crown dependency, but flies the British flag. There are seven Isle of Man registered ships in or close to the Persian Gulf, according to data compiled by Bloomberg. London-based BP also charters ships to export crude from the region, and will sometimes take tankers on long-term charters.
The Isle of Man Ship Registry confirmed that vessels registered there are currently operating in the Gulf. It said such carriers receive the same protection and support as U.K. ships, as deemed appropriate by the British government.
There are 15 ships flying the flags of Gibraltar, the Isle of Man and the U.K. presently in or around the Persian Gulf, according to data compiled by Bloomberg. They span a wide mix of different types of merchant vessels from tankers to LNG carriers, container ships and dry-bulk ships.
“U.K.-flagged vessels, as well as broader flags of convenience and U.K. interests, continue to exist in a status of heightened but manageable risk,” Dryad Global, a London-based private intelligence firm advising energy companies, shipowners and commodity traders, said in a note. “It is highly likely that this latest incident will provide further impetus for a coordinated international response to provide naval escorts to vessels within the region.”
Premium Rates
The growing perils for vessels in the region has been most clearly seen in the cost of insuring tankers. Premiums for the ships and their cargoes sailing to and from the Persian Gulf soared more than tenfold late-last month, although it’s unclear what impact the latest incident will have.
The hike came not long after the Joint War Committee, a group that advises insurers, designated the entire Persian Gulf and waters just outside it a so-called Listed Area -- the riskiest possible classification. The assessment gives underwriters room to charge more.
Keeping Watch
Shipping groups have also been ramping up guidance to their members. Crews should be on alert for any approaches toward a ship, while also using spotlights and sonar equipment to deter approaching divers, according to the Oil Companies International Marine Forum.
Last week, five groups jointly issued a statement advising owners not to use private armed guards, as that may exacerbate already high levels of tension. Using force against possible threats in the Gulf of Oman could escalate the situation and endanger ships and their crews, the groups said.
“There is a greater risk shipping from the Persian Gulf, but this risk has been lingering around for quite a few months now,” says Warren Patterson, head of commodities strategy at ING Bank NV. “Obviously the latest action does little to calm those concerns.”