Greece warns oil tankers to avoid waters near Iran

Greece has warned oil tankers and other vessels flying the country’s flag to avoid sea waters close to Iran following the seizure of two Greek-flagged oil tankers by Iranian forces last week.

Ioannis Plakiotakis, Greece’s shipping minister, told the Financial Times he had issued a “strong recommendation” to Greece-flagged vessels to avoid all “sea waters under Iran’s jurisdiction” in a move that had the potential to destabilise tanker markets at a time when oil prices were already at the highest level in a decade.

Greece is a shipping powerhouse with almost a quarter of all oil supertankers sailing under its flag. The Strait of Hormuz, which separates Iran from the Gulf states, is just 21 miles wide at its narrowest point and accounts for about a third of all seaborne global oil trade daily.

The guidance from the Greek shipping ministry, while falling short of an outright ban on Greek-flagged vessels navigating through the Hormuz strait, is nevertheless likely to lead to greater caution from tanker operators in assigning vessels to Middle Eastern routes.

Shipping operators, including the owner of the Prudent Warrior seized by Iran, said they were asking for further guidance from the Greek shipping ministry. Other tanker operators said they were already appraising the safety of operating in and around Hormuz.

“After the seizure of the two Greek flagged tankers, we are reassessing the safety of the Arabian Gulf,” said Panos Dimitrakopoulos, chief executive of Signal Maritime, a commercial ship management company based in Athens.

Shipping analysts said owners of Greek-flagged Very Large Crude Carriers — among the largest and most common supertankers that are capable of carrying more than 2mn barrels — would be unlikely to risk their ships on Middle Eastern routes.

Daily shipping rates for VLCCs are in negative territory meaning there is little incentive to put them at risk, with prices pressured by a slowdown in buying from China amid Covid-19 lockdowns.

Conversely, rates for small and midsized tanker markets have been buoyed by the rerouting to trade flows following Russia’s invasion of Ukraine, with smaller tankers in high-demand for short-haul routes in the Atlantic basin.

“Any Greek owner is going to think twice before going into the Middle East,” said Richard Matthews, head of research at E A Gibson shipbrokers. “While the response has been muted in tanker markets so far, Greeks are the largest tanker owners in the world, so the industry will be watching closely.”

The global oil tanker market has already faced disruption after Russia’s invasion of Ukraine. Many oil traders have shunned vessels from Sovcomflot, the state-backed Russian company that is the largest owner of medium-sized oil tankers in the world.

Last month Athens seized the Russia-flagged Pegas oil tanker — subsequently renamed Lana — for carrying sanctioned Iranian crude. US authorities are reported to have last week taken the Iranian crude from the tanker.

Iran has indicated its action in seizing the tanker was designed primarily to discourage other countries in helping the US seize its oil, which has been under sanctions by Washington since the US left the nuclear deal in 2018.

“Our ties [ with Greece] must not be hampered by deeply shortsighted miscalculations, including highway robbery on the command of a third party,” said Saeed Khatibzadeh, Iran’s foreign ministry spokesman, in a post on Twitter on Saturday.

The statement came after Iran’s Tasnim News Agency, affiliated to the Islamic Revolutionary Guard Corps, said on Friday that 17 other Greek tankers were in the Gulf waters, which could be seized by the elite force “if Greece continued its games”.

In 2019 the UK arranged convoys for British-flagged tankers sailing through the Hormuz strait following the Iranian seizure of the Stena Impero, an oil products tanker flying the Red Ensign.

Additional reporting by Najmeh Bozorgmehr in Tehran and Harry Dempsey in London