Hundreds Of Ships Stranded On Both Sides Of Strait Of Hormuz For Fifth Consecutive Day

The shipping crisis in the Persian Gulf intensified on Wednesday after a U.S. submarine strike hit an Iranian warship off Sri Lanka. The escalation widened the ongoing conflict and further disrupted traffic through the Strait of Hormuz.

Hundreds of tankers and cargo vessels have now been stranded on both sides of the key waterway for a fifth consecutive day. The situation is affecting global oil and liquefied natural gas (LNG) shipments.

Ship-tracking data shows that at least 200 vessels, including oil tankers, LNG carriers and cargo ships, remain anchored off major Gulf producers such as Saudi Arabia, Iraq and Qatar.

Many other ships are waiting outside the Strait of Hormuz until the security situation improves.

The Strait of Hormuz is one of the world’s most important maritime chokepoints. Around 20% of global oil and LNG supplies, equivalent to about 20 million barrels of oil per day, normally transit the narrow waterway connecting the Persian Gulf with the Gulf of Oman and the Indian Ocean.

Shipping activity has dropped sharply since the conflict began over the weekend. Data cited by international agencies shows that only three tankers carrying about 2.8 million barrels of oil crossed the strait on March 1. This is far below the usual daily average of about 19.8 million barrels, marking an 86% decline.

Separate shipping data indicates that around 706 non-Iranian tankers are currently waiting in the region. These include 334 crude oil tankers, 109 vessels carrying dirty petroleum products and 263 ships transporting clean petroleum products.

Security incidents involving merchant ships have also increased. At least eight vessels have reportedly been hit in the region since Saturday.

On Wednesday, the Maltese-flagged container ship Safeen Prestige was struck by a projectile near the northern end of the Strait of Hormuz.

The United Kingdom Maritime Trade Operations (UKMTO) said the crew abandoned the vessel after the attack. Two other ships were also damaged earlier on Wednesday near the UAE port of Fujairah.

The Marshall Islands-flagged crude tanker Libra Trader reported a loud explosion and debris from an unidentified projectile. The Panama-flagged bulk carrier Gold Oak was also struck by a projectile.

Neither vessel suffered major damage and no crew injuries were reported. The conflict is now affecting oil and gas production across the Middle East.

Sources said Qatar has halted LNG liquefaction operations and may not resume normal exports for at least a month after attacks on production facilities. QatarEnergy has declared force majeure on LNG shipments.

Meanwhile, Iraq has reduced oil production because storage tanks have filled up as tankers are unable to load crude. Producers in Saudi Arabia, the UAE and Kuwait are also facing difficulties loading cargo.

Sources also said that Saudi Arabia’s Ras Tanura refinery and export terminal was struck on Wednesday.

Despite the disruption, a rare voyage took place on Tuesday when the Suezmax tanker Pola passed through the Strait of Hormuz to load crude in the UAE.

The vessel had switched off its AIS tracking signal while approaching the strait before reappearing near Abu Dhabi.

The worsening security situation has sharply increased marine war-risk insurance costs. Industry sources say premiums have risen at least five times in recent days.

Insurance brokers say coverage is still available, but costs now depend heavily on the vessel type, cargo and route.

Maritime security experts warn that protecting every commercial ship in the region would require a very large number of naval vessels.

The maritime security level in the Strait of Hormuz has already been raised to “critical,” the highest risk category, according to UKMTO.

The disruption is also creating supply problems for Asian energy markets, which depend heavily on Middle East exports.

Around 60% of Asia’s oil imports come from the region, leaving countries such as China, India, Japan and South Korea vulnerable to supply disruptions.

Several refiners across Asia are considering production cuts of 20-30% due to uncertainty over crude deliveries.

Indian companies including Mangalore Refinery and Petrochemicals and Petronet LNG have issued force majeure notices due to the supply disruptions. India has also reduced natural gas supplies to some industries in anticipation of tighter LNG availability.

Refiners in Japan and Indonesia are seeking replacement cargoes from the United States, while Indian buyers are considering increased purchases from Russia.

Energy markets have already reacted to the escalating conflict. Oil prices have risen about 12% since the war began on Saturday.

Goldman Sachs has raised its second-quarter Brent crude forecast by $10 to $76 per barrel and increased its WTI forecast by $9 to $71 per barrel.

Analysts say that if shipping disruptions in the Strait of Hormuz continue, global oil flows could fall and inventories may tighten in the coming months.

References: Reuters, livemint