U.S.-Iranian maritime confrontation further escalates, with focus on one of the world's most sensitive energy routes. The U.S. military says an oil tanker associated with Iran sank after being hit in the Gulf of Oman, and two other crude oil carriers were permanently disabled. Since the incident occurred over the weekend when the oil market was closed, markets are awaiting price reactions once crude oil futures trading resumes.
The US military claims that three oil tankers were hit
The United States Central Command stated that an oil tanker named M/T Kylo, also known as Noxen, sank after being struck at multiple locations on Saturday. The U.S. side claimed that the ship was not carrying any cargo at the time, and the crew was instructed to abandon the vessel before the strikes. Subsequently, the command released video footage of the ship tilting and sinking.
The U.S. also stated that the vessels M/ T Downy located off the coast of Khark Island, as well as M/ T Stark 1 near Jask, were also disabled during the operation. The United States described these three ships as part of an Iranian-related oil transportation network, claiming that this network provides funding for the Islamic Revolutionary Guard Corps of Iran and its regional partners.
The conflict originated from a missile attack.
According to the U.S. Central Command, this strike is in response to a previous missile attack by Iran's Islamic Revolutionary Guards. The U.S. side stated that Iran launched multiple ballistic missiles at an American aircraft carrier and a missile destroyer operating in the regional waters, but both vessels managed to evade the attacks without any casualties.
The Iranian side stated that its forces attacked three oil tankers traveling along "unauthorized routes" through the Strait of Hormuz, and also assaulted three vessels associated with the United States in other maritime areas. This claim has not yet been independently verified. Iran later claimed that it had attacked an American unmanned vessel attempting to enter the Strait of Hormuz on Sunday, a claim which, as of the latest reports, has not been confirmed by the U.S. side.
Hormuz Shipping continues to shrink
This incident has once again raised the shipping risks in the Strait of Hormuz. The U.S. strikes against the location of M/ T Downy have drawn particular attention, as Kharg Island has long been responsible for approximately 90% of Iran's crude oil export shipments. However, under the impact of ongoing conflicts and U.S. sanctions, Iran's crude oil exports have already been disrupted.
Shipping data also shows that the traffic through this waterway continues to decline. Kpler Preliminary data indicates that only 4 cargo vessels crossed the Strait of Hormuz on Thursday, which is lower than the 9 vessels on Wednesday and significantly lower than the average of about 15 vessels over the past 10 days. This statistic does not include vessels that have turned off their transponders.
Before the conflict erupted in February this year, approximately 125 large merchant ships passed through the Strait of Hormuz on a daily basis. This waterway has long been responsible for transporting crude oil and liquefied natural gas around the world; therefore, military actions near Halq Island, Jask, and the Gulf of Oman can quickly affect the energy market.
Oil prices await the reaction of futures opening.
As the attack occurred over the weekend, the full market reaction to Brent crude oil and WTI crude oil will not be apparent until futures trading resumes. Last Friday, Brent crude oil closed at $96.28 per barrel, up 7.6% for the week; WTI closed at $91.48 per barrel, with a weekly increase of nearly 10%.
The aforementioned increase occurred before the news of the tanker attack on Saturday and the confirmation of the shipwreck on Sunday. This means whether a new round of geopolitical risk premiums will continue to expand will become the focus of market observation in the coming period.
