The shipping route to the Persian Gulf is often referred to as the highway for world trade, a stop in oil shipments in the region would immediately lead to a doubling of international oil prices, an expert has warned.
According to the Norwegian Shipowners’ Association, Thursday’s attack on two tankers in the Gulf of Oman can negatively affect world trade, as fellow shipping companies will seek to minimise their risks.
One of the ships, the Front Altair, is owned by the Norwegian company Frontline. All 23 crew members were evacuated.
“Right now we have 25 Norwegian-controlled ships in the Persian Gulf, which says a whole lot about the scope of the Norwegian activity in the area” John Hammersmark, director for safety and emergency planning at Norway’s Shipowners’ Association, told national broadcaster NRK.
The shipping route that passes through the Suez Canal and further to the Gulf of Oman and the Persian Gulf is often referred to as the highway of world trade. Out of 19,000 ships passing the route annually, 1,600 are Norwegian.
Hammersmark called it a “serious situation”, recalling that Thursday’s attack happened only a month after four ships, including a Norwegian one, were sabotaged off the UAE coast.
“This is a serious development, both in terms of sailors’ lives and health, but also because of the ships’ safety and environmental repercussions in a situation like today”, Hammersmark said.
According to Hammersmark, the region of Persian Gulf and the Gulf of Oman has become dangerous to operate in. Although the cause and the circumstances of the attack hasn’t been established yet, the Norwegian Maritime Directorate advised Norwegian ships to exercise extreme care and stay as far as possible from the Iranian border.
According to the shipping professionals, the incident may have far-reaching global consequences.
“The shipping industry sees this as an escalation of the situation. We are so close to a conflict that is possible without actually being an armed conflict. The tension level is high”, Jakob Larsen, a security manager at the international industry association BIMCO, told NRK.
Hammersmark also noted that world trade could face aftershocks from the events.
“One potential development is that some shipping companies will get rid of this risk”, Hammersmark said, referring to civilian ships’ passage through the Persian Gulf.
Raw material analyst Bjarne Schieldrop from SEB has suggested that a stop in tanker operations in the Persian Gulf will have major consequences for international oil prices.
“If a full stop of the oil flow out of the Persian Gulf were to happen, it would immediately cause a doubling of oil prices”, Schieldrop said.
As a consequence of Thursday’s attack, oil prices have already risen by four percent, which Schieldrop described as a “moderate response”.
On Thursday, explosions occurred on two oil tankers, the Norwegian-owned and Marshall Islands-flagged Altair and the Singaporean-owned and Panama-flagged Kokuka Courageous. Satellite images showed that smoke from the burning ships stretched more than 40 kilometres.
According to the IRNA news agency, 44 people, including Russian nationals, were taken to the Iranian port city of Jask.
According the Frontline shipping company, no pollution had occurred despite the blast.