Expert: Iran is in the long term with the hijacking of oil tankers

Container ship MSC Aries Captured by Iran The anniversary weekend marked the hijacking of at least a sixth ship by Iran and its proxies in response to the war between Israel and Gaza, further challenging the long-standing principles of freedom of navigation on which shipping depends.

Before this weekend's seizure of the tanker, the last ship Iran hijacked was the St. Nicholas on January 1. According to US Naval Forces Central Command, this brings the total number of ships being held to five, with more than 90 crew members hostage. Before that, the Iran-backed Houthis hijacked the Galaxy Leader ship on November 19.

The latest development has shipping and energy experts bracing for a long-term timeline of uncertainty.

“Iran will remain in this situation for the long term,” said Samir Madani, co-founder of Tankertrackers.com, an independent online service that tracks crude oil shipments at several geographical and geopolitical points of interest.

Iran has determined that the MSC Aries has a connection to Israel. The container ship has a carrying capacity of 15,000 TEU (twenty foot equivalent containers). The ship was chartered by MSC, but it is owned by Zodiac Maritime, a subsidiary of Israeli billionaire Eyal Ofer.

MSC declined to comment.

Madani said he did not expect a quick release or a negotiated release. “They will keep MSC Aries for a long time. Iran has been holding some tankers for about a year, if not longer now,” he said.

According to TankerTracker's information, Madani said the ship was being held in the Koran Strait, not far from three other tankers hijacked by Iran: Advantage Sweet, Niovi, and St. Petersburg.

While the United States is considering imposing more sanctions on Iran in response to its recent attack on Israel, Iran is using hijacked ships as a means of retaliation for the sanctions.

“Iran has already seized the Kuwaiti oil that was on board the Advantage Sweet ship and loaded onto the supertanker Navarz. Iran has chosen to do this as a way to compensate for the sanctions,” Madani said.

While the Newvi was empty at the time of its capture, the St. Nicholas was filled with one million barrels of Iraqi oil.

Treasury Secretary Janet Yellen said Tuesday that the government may do more to block Iran's ability to export oil despite U.S. sanctions. China's purchases of Iranian oil in recent years have allowed Iran to maintain its oil reserves Positive trade balance.

According to the US Energy Information Agency, China, the world's largest importer of crude oil, It imported 11.3 million barrels per day of crude oil In 2023, 10% more than in 2022. Iran ranked second in oil exports to China after Russia. Customs data indicates that China imported 54% more crude oil (1.1 million barrels per day) from Malaysia in 2023 compared to 2022, with Industry analysts Speculation is that much of the oil shipped from Iran to China has been reclassified as originating from countries such as Malaysia, the United Arab Emirates and Oman to avoid this. US sanctions.

Markets continue to assess the risks of further escalation in military tensions between Israel and Iran, which could lead to disruption in the Strait of Hormuz, through which about 30% of the world's seaborne oil passes, according to JPMorgan. Oil prices rose on Tuesday amid talk of sanctions.

An Iranian blockade would send oil prices higher, but the risk is low given that the strait has never been closed despite numerous threats by Tehran to do so over the past four decades, according to JPMorgan.

“They can’t close the Strait of Hormuz, but they can do significant damage to energy infrastructure and ships in the region,” Helima Croft, head of global commodities strategy and Middle East and North Africa research at RBC, told CNBC on Monday. In reference to Iran's capabilities.

“Although I cannot imagine that Iran wants to fill its anchorages with ships, it wants to keep the waters in a constant state of chaos,” Madani said. But in conclusion, he said: “They will shoot themselves in the foot because their biggest customer is China.”

Andy Lipow, president of Lipow Oil Associates, says a closure of the Strait of Hormuz will push Brent crude prices into the $120 to $130 range. “This would strain relations with China and India, which buy a large amount of Persian Gulf oil to meet most of their energy needs.”

Lippo also said Iran may be reluctant to close the waterway for fear of antagonizing Saudi Arabia, Kuwait and Iraq, which depend on the strait being open for most of their oil exports. He said that the biggest immediate fear in the oil market is that the attack launched by Iran on Israeli territory will lead to a counterattack by Israel on Iran that will damage oil production and export facilities.

Kevin Book, managing director of ClearView Energy Partners, says markets need to keep an eye on potential sanctions from both the US and the UN.

In a note to clients, ClearView highlighted that the House of Representatives added several Iran sanctions bills to its agenda for consideration this week, under suspension rules, including new sanctions on Iranian oil exports to China. Book said that the House of Representatives is studying 11 draft laws in response to the Iranian attack on Israel.

“We believe that most, if not all, bills could (hypothetically) receive bipartisan, veto-proof support,” the memo said. “Passage of the resolution requires a two-thirds majority of all members present and voting.”

Israel has also asked the United Nations to reimpose multilateral sanctions that were lifted under the Iran nuclear deal, but for that to happen, France, Germany and the United Kingdom, parties to the nuclear deal, must agree. “There are many dangers unfolding,” Bock said. “The forest is on fire.”