Oil spills, 20,000 stranded seafarers, and a widening conflict

The Bahamas-flagged tanker Sonangol Namibe has just been attacked while at anchor approximately 30 nautical miles southeast of Mubarak Al Kabeer, Kuwait.

The master reported a massive explosion on the port side followed by the departure of a small craft. According to alerts from the UK Maritime Trade Operations (UKMTO) and security specialist Vanguard, the vessel has taken on water and oil has been observed leaking from a damaged cargo tank.      The location of the strike, Mubarak Al Kabeer, is situated some 750–800 km from the Strait of Hormuz, the waterway Iran claims to have blocked. This suggests a strategic widening of Iranian strikes, which had previously been concentrated in the strait, Bahrain, and the Gulf of Oman. “There could be some environmental impact,” UKMTO warned, though the crew is reported safe.      Further south, the 1,740 teu containership Safeen Prestige was struck by a projectile north of the Omani Musandam Governorate, suffering an engine fire. Splash records indicate that at least 10 commercial ships have now been targeted since the war began.

The tanker market is currently defined by a “stalemate” as ships pile up on both sides of the Hormuz Strait. Broker Fearnleys reports that while rate estimates for loading in the Middle East Gulf or Saudi Red Sea have “skyrocketed,” the figures remain largely academic. “No cargoes have been physically lifted since the war broke out,” Fearnleys noted, describing current Baltic rates as a “guestimate” by the broking community while the physical trade remains frozen.

The gas sector is facing even tighter constraints. Qatar declared force majeure on gas exports on Wednesday, a move that could remove 20% of the global LNG supply for at least a month. Consequently, LNG spot rates have surged to over $300,000 per day, a ten-fold increase from the $30,000 seen just last week.

In the liner sector, the crisis is beginning to leave a measurable footprint on schedules. Analysis from TimeToCargo shows average arrival delays for Asia-Europe flows have increased from 2.26 to 3.73 days. However, certain carriers are feeling the heat more than others; HMM has seen average delays jump from 3.72 days to 10.45 days, while MSC’s delays have risen to nearly five days.

The situation is most acute at Jebel Ali, where departure delays have spiked to 4.2 days from a pre-war average of 0.72. Many carriers are now opting for the longer, more predictable route via the Cape of Good Hope to avoid the carnage. Disruption is likely to begin to build at major transhipment ports in Asia, something seen in earlier shipping crises this decade, including covid and the Houthis’ campaign in the Red Sea.

The financial cost of sailing into the conflict zone has become prohibitive. According to the Financial Times, the cost of insuring a ship through the Strait of Hormuz has soared 12-fold. Shipowners are now being quoted premiums as high as 3% of a vessel’s total value—up from 0.25%.

In response, Donald Trump has vowed to use the US Development Finance Corp to provide war risk insurance and guarantees. He also announced that the US Navy would begin escorting tankers “as soon as possible.” However, industry experts remain sceptical.      Jakob Larsen, BIMCO’s chief safety and security officer, noted that while escorts reduce threats, providing protection for all tankers is “unrealistic” given the number of warships required. He suggested that if the Iranian threat is significantly degraded, escorts might eventually push risks below the “acceptance level” for some owners.      Shipbroker SSY added further caution, noting that the US Navy has privately signalled a lack of escort capacity until the initial stages of military operations are complete. Furthermore, US law restricts the navy from escorting ships that are not US-flagged or American-owned. SSY pointed to the Red Sea precedent, where 15 months of naval escorts failed to restore commercial traffic despite downing 400 missiles. “Physical geography favours the attacker,” SSY warned, noting that a destroyer cannot simultaneously counter drone-boat swarms, sweep mines, and manage GPS disruption in the narrow two-nautical-mile-wide transit lanes.

With supplies of energy out of the Middle East under pressure, many nations are taking precautionary steps. Myanmar, for instance, has instituted an odd/even ruling for cars, where cars with number plates that start with an even number can only drive on an even date and vice versa with odd numbers.

In China, meanwhile, the National Development and Reform Commission (NDRC) convened a meeting to discuss the export of refined oil products yesterday. A verbal request was made to temporarily suspend, effective immediately, all refined oil product exports, except for three categories – bonded aviation kerosene, bonded marine fuel, and supplies to Hong Kong and Macau. Three requirements were put forward: first, suspend the signing of new export contracts; second, try to negotiate the cancellation of contracts already concluded and with scheduled shipping; and third, it was advised not to export contracts already concluded but without scheduled shipping.