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Maritime Brief – Persian Gulf Update
Maritime Update
Persian Gulf
Con ta ct : +44 ( 0 ) 12 0 2 3 08 8 10 SOLACEGLOBAL.COM Page 0
Maritime Brief – Persian Gulf Update
Executive Summary
With the continued rhetoric between Iran and the United States, the attacks in May and June, the recent seizure of Grace 1 and alleged
targeting of the British tanker British Heritage, the threat to merchant vessels entering the Gulf is high. While it remains unclear who the
perpetrator(s) of the two attacks in the Gulf of Oman are, the incidents, coupled with the recent rhetoric by Tehran threatening oil tankers
in the Gulf, demonstrates the vulnerability that large merchant vessels are in whilst caught in the middle of the ongoing geopolitical
standoff.
It is important to remember that despite the specific threat to British flagged vessels by Tehran since the Grace 1 seizure, multiple different
flagged vessels have been targeted and, in the case of the Fujairah and Gulf of Oman incidents, attacked. Regardless of the flag that
the ship is flying, the nationality of the vessel’s owner, or even who was behind previous incidents and attacks, there is a heightened risk
whilst operating in the region and the risks are not going to deescalate in the near future.
As such, whilst it is highly unlikely that, given the number of vessels transiting the area, that a vessel will be attacked or even targeted,
extreme caution is highly advised. This is why war risk underwriters are charging additional premiums for calls to the Arabian Gulf/Gulf
of Oman, with some of the prices being quoted six times higher than before the incidents in May and June.
Why the further tensions increase?
The latest update and the further ramping up of tensions has been triggered by two
Economic Impact
key events. Firstly, while European countries are continuing to attempt to save the
Joint Comprehensive Plan of Action (JCPOA; or Iran Nuclear Deal). Tehran has Oil prices have hit a six-week high due to
been slowly breaking the terms of the treaty and, over the weekend of the 7-8 July, geopolitical instability in the Persian Gulf. The
Iran broke the uranium enrichment limit set by the deal. Second, on 4 July, the incident between the HMS Montrose and the
tanker Grace 1, was detained by Gibraltarian police after being boarded by Royal Iranian vessels has been coupled with a
Marines. The vessel was suspected of transporting oil to Syria in violation of the EU tropical depression in the Gulf of Mexico to
sanctions on Damascus. Tehran has since acknowledged its ties to the vessel but bring prices to the 60 USD per barrel price
denied it was en route to Syria. mark.
The detention of the Grace 1 resulted in an escalation of tensions between London Retail prices for petrol in the US have been
and Tehran. With the latter stating that they would deliberately target British flagged climbing since the shooting down of an
vessels in the Persian Gulf. Advisor to Iranian supreme leader Ayatollah Khamanei American drone on 20 June. Despite the United
tweeted (in Persian) “If Britain does not release the Iranian oil tanker, it is the States being de-facto energy independent,
authorities’ duty to seize a British oil tanker.” Iran also accused the British of acting shocks to the market, like the closing or
to the orders of Washington in the seizure of the vessel. restricting of the Strait of Hormuz, would see
prices skyrocket in the States and across the
Police have since arrested the captain, chief officer and two other officers of the
globe.
Grace 1 and are understood to be interviewing them. It has been stressed that none
of them has been charged at the time of writing.
The UK had been, and still is, one of the leading voices in trying to rescue the 2015 deal after U.S. President Donald Trump pulled out
and Iran stepped up uranium enrichment in defiance of the extended sanctions. To read more regarding the Iran Nuclear Deal please
read our recent report on the subject: https://www.solaceglobal.com/report/iran-deal-collapsing-comes-next/
Persian Gulf
As a result of the Grace 1 incident, and away from the Iran Nuclear Deal, a confrontation between a British warship and three Iranian
vessels has created, yet another, incident in the Persian Gulf. This has added to the two previous attacks and the wider instability in the
region. Creating an insecure trading environment, especially for British vessels, and resulting in the aforementioned increase in insurance
premiums on vessels entering the Gulf.
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The incident has, like many of the recent incidents and attacks in the region, garnered different narratives depending on whether
Washington, London or Tehran are talking. According to the reports that are coming out via news sites and social media, a British flagged
tanker, the British Heritage, was “confronted” by a number of Iranian military vessels whilst in the Persian Gulf. These vessels eventually
left the vessel alone after being warned off by the Royal Navy Type-23 Duke class frigate, HMS Montrose. The frigate was escorting the
tanker to avoid it being targeted in response to last week’s seizure by British special forces of Grace 1.
According to the reports, The HMS Montrose “was forced to position herself between the Iranian vessels and British Heritage and issue
verbal warnings to the Iranian vessels, which then turned away.” It is also understood that the naval vessel deployed a wildcat helicopter
which circled the Iranian boats. It is important to be aware that the Iranian Revolutionary Guards have denied trying to stop the vessel.
The UK Department for Transport has issued new guidance to all British-flagged commercial ships to go to a heightened state of security
in the Strait of Hormuz. British-flagged ships have been advised to keep alert for Iranian patrol boats "being aggressive towards them".
This incident is just the latest in a now growing list of events surrounding the strategic
Why Do People Care? important gulf and on the Arabian Peninsula (see map above). Most notably, on 13
The Strait of Hormuz is the world's single June, explosions occurred on two underway tankers in the Gulf of Oman; the Front
most important oil passageway, forming Altair and the Kokuka Courageous. The attacks on the vessels were almost certainly
a chokepoint between the Arabian Gulf carried out using some sort of limpet mines placed above the waterline on the side of
and the Gulf of Oman. The 39km (21 both vessels; with photos depicting one unexploded mine on the side of one of the
nautical miles) strait is the only route to vessels. Investigations are continuing. The explosions on the Front Altair resulted in
the open ocean for over one-sixth of quite extensive damage from the resulting fire; however, the fire did not appear to result
global oil production and one-third of the in any significant damage to the ship’s cargo or fuel load.
world's liquified natural gas (LNG). The
Video footage released by the United States depicts what they allege are Iranian
regions two largest powers face off over
Revolutionary Guards removing the unexploded limpet mine on the vessel. The US has
the nearby Persian Gulf; Iran and Saudi
stated that Iran was behind the attack, while Iran has blamed the US and stated that it
Arabia.
was a false flag operation. The incident followed an attack in May, where four vessels
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were struck, this time below the waterline, whilst at anchor at Fujairah in the United Arab Emirates.
The attacks and the targeting of tankers by Iranian vessels has resulted in insurance rates to transit the Strait of Hormuz to increase
substantially.
VOLUME OF CRUDE OIL AND PETROLEUM PRODUCTS TRANSPORTED THROUGH WORLD
CHOKEPOINTS
20
18
18.5
16
16
MILLION BARRELS PER DAY
14
12
10
8
6
5.8 5.5
4 4.8
2 3.2
2.4
0.9
0
Bab El-Mandeb Bosphorus Cape of Good Danish Straits Panama Canal Strait of Hormuz Strait of Suez Canal (incl.
Hope Malacca SUMED)
CHOCKEPOINTS
Military deployment?
What remains unclear is what next steps major international powers will take. It is likely that there will be some sort of military deployment,
especially from the Americans and the British. Indeed, Britain has already stated that HMS Duncan, a Type-45 Daring-class destroyer,
will sail for the Gulf in the coming days. The vessel has recently finished NATO-related exercises in the Black Sea. The vessel will operate
alongside the frigate, HMS Montrose, as well as American vessels deployed in the Gulf. However, at this time, it is not expected that the
destroyer will be part of any maritime coalition.
Indeed, US General Mark Milley, nominated to become chairman of the US Joint Chiefs of Staff, has stated that Washington was working
to put together a coalition that would provide a “military escort, naval escort” to commercial shipping in the Persian Gulf. However, the
exact composition of this coalition remains unclear. According to Milley, the initiative would be developed over the next couple of weeks
and will likely involve the US, Britain and a number of non-regional countries.
Both Britain and the US maintain a constant presence in the Persian Gulf. The Royal Navy’s HMS Montrose has been deployed to the
region since 2018 and has been keeping in close contact with British vessels transiting the area since the Grace 1 seizure. However,
until HMS Duncan arrives, the frigate is the only British warship capable of conducting escorting duties in the area. There is the HMS
Brocklesby, a British minesweeper, currently in Bahraini waters; however, the ship carries out a very different role and would be ill-suited
to escorting tankers.
The American navy, on the other hand, has the USS Abraham Lincoln and Carrier Strike Group 12 in the region. The fleet was deployed
at the beginning of the rise in tensions between America and Iran and consists of the Nimitz-class carrier, at least five destroyers, the
USS Leyte Gulf, a Ticonderoga-class cruiser. Several American warships are also understood to be operating inside the Persian Gulf
and in the wider area; including a Wasp-class amphibious assault ship.
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In addition to this, there are a few other navies deployed carrying out exercises off the coast of India as well as the ongoing anti-piracy
deployments off the coast of Arabia and Somalia, which could have ships diverted from.
As such, it is expected that some sort of escorting practice will be set up. In the short term, British warships will likely escort British tankers
and freight vessels through the Gulf. Indeed, it appears that HMS Montrose is already completing this task on an ad-hoc basis. HMS
Duncan is likely to start supporting the frigate when it arrives. In the medium to long term, a coalition including International (US, French
and other European) and local (Saudi and UAE) vessels will begin a type of escorting practice. The longer term will largely depend on
how relations develop between Tehran and Washington and the rest of the world.
Currently, it is hard to envision the closure of the strait or a restriction to shipping in the region. However, should further incidents occur,
if a country makes a miscalculation in the region or if a shot is fired, even by accident, we may see the risk in the region spiral even
further. As such, those operating in the Gulf should ensure they employ caution, limit the time they spend in the region, and strictly adhere
to all instructions issued by military forces, regardless of their nationality.
Updated Advice
• All vessels and companies operating in the area should continue employing the highest degree of caution in the coming weeks
and months.
• Thus far, the attacks have occurred at night, consider transiting the Straits of Hormuz during the daylight hours. However, as there
have only been two incidents at this time, attacks may begin to occur during the daylight hours; remain flexible.
• Limiting the time spent at anchor in the region is advised.
• Keep an appropriate distance from Iranian waters for the foreseeable future.
• Consider operating at the maximum possible speed whilst remaining safe from a navigational point of view.
• Continually operate a gentle side to side motion with the vessel’s rudder in order to make the ship weave; making approaching
the vessel more difficult.
• Equip the crew with night vision which may help in identifying suspicious activity at night.
• Employ additional personnel on watches; including on the bridge wings and at different areas of the ship whilst at anchor.
• Employ searchlights at the first sign of suspicion; thus far the attacks have wanted to remain clandestine in their activities.
Illuminating them and possibly using loudspeakers may deter attacks.
• It is strongly advised that you do not employ flairs or emergency rockets; the attackers may return fire.
• Companies and vessels should remain in contact with the UKMTO in Dubai and the US Navy in Bahrain; ensuring that they
receive regular updates from both.
• Strictly adhere to any official maritime notices as well as any official orders issued by countries or military vessels in the region.
• Report all suspicious maritime activity immediately.
• Remain in contact with stakeholders and company headquarters.
• Continue to monitor all Solace and media updates for the latest information.
• Finally, as all previous attacks have only caused superficial damage, remain calm and follow procedures in place if involved in an
incident.
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