Iran seizes second oil tanker in a week as tensions with US increase

Iran has seized a second oil tanker in a week, the US Navy said on Wednesday, increasing tensions in one of the world’s key shipping lanes as Tehran steps up retaliation for the US seizure of a cargo of its crude.

The Niovi, a Panama-flagged oil tanker, was sailing from Dubai towards the United Arab Emirates port of Fujairah in the Gulf of Oman when it was seized by the Islamic Revolutionary Guard Corps Navy, the US Navy said in a statement. It added that “a dozen IRGCN fast-attack craft swarmed the vessel in the middle of the Strait [of Hormuz]” and “forced the oil tanker to reverse course” towards Iranian territorial waters.

The Strait of Hormuz is the world’s most important oil shipping lane, with roughly a third of all seaborne crude cargoes having to navigate the narrow waterway that separates Iran from the Gulf Arab states.

Iran last week seized a Marshall Islands-flagged oil tanker in the Gulf of Oman that was sailing from Kuwait to the US under charter by US energy major Chevron. The tanker is being held at the Iranian port of Bandar Abbas.

US officials told the Financial Times last week that they believed last week’s seizure of the Advantage Sweet was retaliation after the US seized a cargo of Iranian oil under court order and redirected it to sail to the US. That tanker, the Suez Rajan, reappeared on satellite tracking on Tuesday having sailed west around the Cape of Good Hope.

Iranian media did not say why the latest seizure occurred but the Mizan news agency, affiliated to the country’s judiciary, quoted Tehran’s prosecutor-general as saying it had happened under judicial decree.

Images released by the US Navy suggest the Niovi was empty at the time of its seizure, as it was sitting high out of the water. The draft of an oil tanker lowers once it has filled up with crude.

The US has targeted Iran’s oil exports since President Donald Trump reimposed sanctions in 2018 after withdrawing from the nuclear deal with Tehran. Exports from Iran had risen in the second half of 2022, however, with analysts suspecting the US of taking a softer approach to sanctions enforcement as it battled to bring down energy price inflation following Russia’s invasion of Ukraine.

As energy prices have eased in recent months, the White House has come under pressure from US lawmakers to take tougher action.

Despite the threat of tanker seizures disrupting shipments, supply risks have been overshadowed by concerns about the strength of the global economy. Brent crude, the international benchmark, dropped below $75 a barrel on Wednesday for the first time since March, falling as low as $72.88 a barrel.

Energy analysts have cautioned that if the number of tankers seized by Iran continues to rise then traders could price in a higher risk of disruption to oil flows, but so far do not expect an aggressive response from Washington. US president Joe Biden has sought to lower petrol prices to support the economy and his re-election bid next year.

“The White House has little economic incentive to do anything that risks the movement of oil in the Gulf, given the impact that would have on crude prices,” said Raad Alkadiri at Eurasia Group.

The Niovi tanker seized on Wednesday is a very large crude carrier or VLCC, capable of carrying more than 2mn barrels. The ship was being operated by Greek shipping company, Smart Tankers. Athanassios Papayannopoulos, who is in charge of monitoring the vessel’s safe operation, said the company had not yet been able to establish contact with the crew since the IRGCN boarded the tanker.

Crew members of tankers seized by Iran have generally been treated well and eventually released. Mark Clark, a spokesman for the operators of the Advantage Sweet, said they had been able to establish contact with its largely Indian crew over the weekend and that they were faring well.

Satellite tracking showed the Niovi VLCC had been in dry dock in Dubai for the past two weeks, suggesting it had been undergoing maintenance work, before sailing for Fujairah, a key refuelling hub for ships in the region.

Additional reporting by Najmeh Bozorgmehr