Iran accuses Saudi Arabia of attack on oil tanker in Red Sea

Bloomberg – Iran said missiles that struck one of its oil tankers in the Red Sea probably came from Saudi Arabia, marking the latest escalation in a tit-for-tat conflict between the two Middle Eastern powers that has roiled energy markets.

The incident, which caused an oil spill and a 2.3% jump in crude prices, comes weeks after a devastating attack on major Saudi oil facilities that the kingdom blamed on Iran. Tensions have been rising steadily in the region since U.S. President Donald Trump unilaterally withdrew from an international nuclear deal with Tehran and imposed harsh sanctions on the Islamic Republic.

Although so far all sides have said they want to avoid war, the possibility of a wider conflict in the region has raised the risk of a disruption that could wreak havoc in the global economy. The Foreign Ministry of China, which gets a significant proportion of its oil imports from the Persian Gulf, urged restraint in order to safeguard peace and stability in the area.

“The explosion points to potential geopolitical risks, and that has once again surprised the market,” said Will Sungchil Yun, a commodities analyst at HI Investment & Futures Corp. in Seoul.

Crude Spill

The Sabiti, a tanker capable of carrying 1 million barrels a of crude, was damaged on Friday near the Saudi port of Jeddah after being hit by suspected missiles, Iranian state media said. The explosions on the tanker occurred between 5:00 and 5:20 a.m. local time damaging two of its main oil tanks, the Islamic Republic News Agency reported.

After initially saying the spill from the tanker had been halted and the damage minimized, the Iranian oil ministry’s Shana news service said crude was again flowing into the Red Sea.

Saheb Sadeghi, the spokesman for the National Iranian Tanker Company, said in a call with Iran’s Press TV that two missiles hit the tanker and probably came from the direction of Saudi Arabia. No one has provided any assistance the damaged ship, Al-Alam news channel reported citing Nasrollah Sardashti, head of NITC.

Oil prices jumped above $60 a barrel in London after the attack. Despite the growing risk to Middle Eastern supplies, crude prices have been depressed by fears of an economic slowdown due to the U.S.-China trade dispute. Brent is still lower than it was before the Sept. 14 drone and missile strikes on Saudi Arabia’s Abqaiq and Khurais oil facilities last month that briefly cut global supplies by 5%, the worst sudden disruption in history.

The Saudi Ports Authority confirmed that an incident involving a tanker had occurred near Jeddah port overnight, but was unable to verify if the vessel was Iranian, according to a press officer.

— With assistance by Dan Murtaugh, Dandan Li, Golnar Motevalli, and Yasna Haghdoost
(Updates with Iran’s accusation against Saudi Arabia in first paragraph)

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