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STRAIT OF HORMUZ (May 3, 2023) A screenshot of a video showing fast-attack craft from Iran’s Islamic Revolutionary Guard Corps Navy swarming Panama-flagged oil tanker Niovi as it transits the Strait of Hormuz, May 3, 2023. U.S. Navy Photo

STRAIT OF HORMUZ (May 3, 2023) A screenshot of a video showing fast-attack craft from Iran’s Islamic Revolutionary Guard Corps Navy swarming Panama-flagged oil tanker Niovi as it transited the Strait of Hormuz, May 3, 2023. U.S. Navy Photo

Latest Tanker Seizure Ratchets Up Tensions for Shipping on Vital Oil Route

Bloomberg
Total Views: 2738
May 3, 2023

By Verity Ratcliffe

(Bloomberg) — Iran seized a second oil tanker in less than a week, ratcheting up tensions for shipping in one of the world’s most vital trade corridors.

Iran’s Islamic Revolutionary Guard Corps Navy intercepted the Panama-flagged oil tanker Niovi at around 6:20 a.m. local time Wednesday as it was transiting the Strait of Hormuz, according to a statement from the US Navy. 

The incident is the latest flare-up in one of the world’s most oil-rich regions. Hundreds of tankers sail through the strait each month on their way to and from ports in Saudi Arabia, the United Arab Emirates, Iraq and Kuwait. Last week, Iran seized a tanker in the nearby Gulf of Oman.

The White House called for the immediate release of the Niovi and its crew, with a spokesperson for the National Security Council calling the seizure contrary to international law and an irresponsible threat to maritime security.

Global benchmark Brent crude futures initially steadied after the report, pausing a slide below $75 a barrel for the first time since March. Futures later resumed their decline, trading below $73 as of 1:30 p.m. New York time.

The Niovi left Dubai and was heading for the United Arab Emirates port of Fujairah when “a dozen IRGCN fast-attack craft swarmed the vessel in the middle of the strait,” according to the US. The ship was forced to head toward Iranian territorial waters off the coast of Bandar Abbas, it said. 

The US spotted the incident while carrying out routine surveillance of the area using a drone, a Navy spokesman said.

Iran’s Tasnim news service reported that Iranian naval forces took a foreign oil tanker in the Strait of Hormuz, without providing further details. The tanker was seized “by order of judicial authorities following a complaint,” the Iranian judiciary’s official Mizan news agency reported, without specifying the legal matter.

The Niovi, built in 2005, is a supertanker capable of carrying 2 million barrels of crude, ship-tracking data compiled by Bloomberg show. Its draft indicated that it wasn’t loaded, according to a signal from its navigation system earlier Wednesday. 

The owner of the vessel, Greece-based Smart Tankers Inc., wasn’t immediately available for comment. 

The seizure follows a notice last month from the Union of Greek Shipowners, which advised members that ships in the Persian Gulf region “show increased caution and avoid navigation in waters under the jurisdiction of Iran.”

Iran’s navy seized the Marshall Islands-flagged Advantage Sweet in international waters in the Gulf of Oman on April 27, according to the US. The tanker, chartered by Chevron Corp., was hauling crude at the time, data compiled by Bloomberg show.

Iran said the ship collided with an Iranian vessel in the Persian Gulf, prompting its navy to seize it. The tanker sailed to Bandar Abbas, where it is being held along with its crew. The US has demanded the vessel’s release.

Some US officials believe that move was in retaliation for a decision by the Department of Justice to force a tanker — headed to China with Iranian oil — to redirect to America, the Financial Times reported.

–With assistance from Alex Longley, Paul Tugwell, Sotiris Nikas, Arsalan Shahla, Prejula Prem and Justin Sink.

© 2023 Bloomberg L.P.

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