Secret Tanker Crossings Keep Oil Prices from Soaring through Strait of Hormuz
On the afternoon of 25 July, a supertanker docked at Qatar’s Mesaieed oil terminal, about 40 kilometres south of Doha. Four days later, loaded with crude oil, it passed through the Strait of Hormuz and continued on into the Persian Gulf. However, shortly after 2pm on 31 July, while off the coast of Dubai, the ship vanished from tracking screens. The supertanker had switched off its Automatic Identification System (AIS), the transponder that broadcasts a vessel’s identity, position, course, and speed.
US Military Escort and “Dark” Passages
The ship’s route was not an isolated incident. As CNN reports in an extensive investigation, it forms part of a new tactic adopted by the oil industry: night-time “dark” passages, transponders switched off, under US military escort, aimed at reducing the risk of Iranian drone attacks. The same vessel had been targeted about a month earlier, hit by a drone, although its cargo did not explode.
Oil Companies and Tanker Chartering
With the assistance of the US Navy, oil companies from Saudi Arabia, Kuwait, Qatar, and the United Arab Emirates have chartered tankers that cross the Strait with their transponders switched off. The ships carry oil from the Persian Gulf to the Gulf of Oman, where it is transferred to other tankers owned or chartered by the end buyers. The original vessels then return to the Persian Gulf to collect a new cargo.
Markets and Insurance
In this way, much of the insurance and physical risk involved in a Hormuz crossing shifts from international commercial charterers to the oil producing countries themselves, and, where the safety of the crossings is concerned, to the United States. The practice appears to have achieved more than the markets are recording. According to the US Department of Energy, an average of 8 to 9 million barrels of oil a day still pass through the Strait of Hormuz, roughly double the volume estimated by Wall Street analysts and shipping trackers such as Kpler, which rely heavily on AIS signals.
Global Energy Market Impact
The new tactic is being applied at a critical moment for the global energy market. The war has disrupted about a fifth of global oil supply for around six months. Meanwhile, commercial oil and fuel stocks have fallen sharply, US strategic reserves are at levels not seen since the early 1980s, and China is drawing on part of its vast reserves to prevent international prices climbing even higher.
Risks and Consequences
Faced with the risk of a far larger energy crisis, Middle Eastern producers began systematically carrying out “dark” crossings in recent weeks. The solution is anything but risk-free. The Strait of Hormuz is only about 37 kilometres wide at its narrowest point, and a tanker can still be detected by radar or satellite even with its AIS switched off. Two vessels from the United Arab Emirates came under attack this week. According to Kpler, despite the risk, about 80% of traffic through the Strait now happens “in the dark”.
Original Article: Secret tanker crossings are keeping oil prices from soaring through the Strait of Hormuz – ProtoThema English — Protothema