US and Iran Trade Tanker Strikes in the Gulf of Oman as Brent Climbs Toward $100

The fighting around Hormuz has turned into something the tanker trade has seen before. A tanker war. Over the weekend of September 5 and 6, the United States struck three Iranian oil tankers: one near Kharg Island, Iran's main crude terminal, one near Jask on the Gulf of Oman coast, and one out in the Gulf of Oman itself. Iran says it hit three tankers in the strait and three US-linked ships in return. It also fired ballistic missiles at a US aircraft carrier and a destroyer. Both reportedly avoided damage.

Brent closed Friday at $96.28, its highest since late July. Before the war started on February 28 it traded around $70. US diesel set a record at $5.85 a gallon.

Why tankers became the target

Each side is going after the other's ability to earn from oil.

The US has been squeezing Iranian exports since April, when it declared a naval blockade of Iranian ports and started intercepting ships that paid tolls to Tehran. US forces boarded or disabled a string of tankers through the spring: the Deep Sea off Malaysia, the supertanker Tifani in the Indian Ocean, and in June the Palau-flagged Marivex and Settebello and the Guinea-Bissau-flagged Jalveer in the Gulf of Oman. Three Indian sailors died on the Settebello.

Iran has used the only lever it has at sea. It makes the strait too dangerous for everyone else. Since March it has hit tankers, bulk carriers, LNG ships and container vessels, and seized the MSC Francesca, the MSC Epaminondas and the tanker Ocean Koi.

The 1980s Tanker War ran on the same logic. Iraq hit ships loading at Kharg. Iran hit ships serving Kuwait and Saudi Arabia. Neither side could stop the other's exports outright, but both could make every cargo more expensive and more dangerous. That war dragged on for years.

What the numbers say

The White House says Hormuz is open and carrying 17 million barrels a day. Before the war the figure was about 20 million. Independent tracking tells a different story. Over a recent ten-day stretch, between 5 and 13 vessels crossed per day, averaging 13. That is a trickle, well short of a functioning strait.

Two US carriers and a group of destroyers now patrol the area. Their presence is supposed to reassure shipping. The Iranian missile fire at the carrier group suggests Tehran reads it as a target list instead.

Politics in Washington are shifting too. Late-August polling put support for the war at 31 percent against 63 percent opposed. That matters for shipping because the exit from this conflict will probably be negotiated, and Hormuz transit terms will sit at the center of any deal.

What owners are doing

Tanker owners have split. Some keep ships well clear of the Gulf and take the steady, very profitable business of long-haul Atlantic crude to Asia. A smaller group takes Hormuz fixtures at extreme rates, with extreme insurance bills and real risk to crews. Fourteen civilian seafarers have died in this conflict so far.

For cargo owners there is no cheap option. Oil that does get out of the Gulf comes through Yanbu or Fujairah, or on ships willing to run the strait. Everything else is replaced by barrels from further away, carried on longer voyages.

The tanker war makes one thing clearer. Nobody in the market expects a clean reopening this autumn. Insurers, charterers and refiners are planning for months more of this, and maybe longer.