Attacks on two tankers carrying Saudi and Emirati oil products are jacking up insurance rates for ship operators in the region, and forcing some captains to forgo setting sail—threatening one of the biggest disruptions to crude trading in the Strait of Hormuz in years.
News of the incidents triggered steep rises in oil prices Thursday. Brent crude, the global benchmark, was up 2.8% at $61.66 a barrel by the late U.S. morning, while West Texas Intermediate futures were 3.0% higher at $52.70 a barrel.
Brokers in Singapore said shipping firms weren’t offering to load cargo near the Strait of Hormuz, which connects the Persian Gulf to the Arabian Sea, as concerns grew over safety and rising insurance premiums.
“We got one crude and three diesel loads up for grabs, but there are no bids for ships,” a veteran broker said, adding that he hadn’t seen a situation like this in years. “The waters are dangerous after the second attack this year. I’ve got a fully laden crude tanker that’s supposed to sail for China today from Fujairah [in the U.A.E.], but the captain says it’s too hot to go out.”
Shipping insurance had already risen in tandem with tensions in the region. Since attacks on two Saudi tankers in the vicinity in early May, premiums have increased by 5% to 15% depending on size and cargo, according to shipowners.
“This will likely cause shipowners and operators to ask for a premium on freight rates for trading in the area, as risk is now clear and present,” said Peter Sand, chief shipping analyst with BIMCO, a shipping trade organization.
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