While global oil markets are used to leading to geopolitical uncertainty in oil prices, this type of geopolitical fallout has not been seen for several years. The world's largest oil exporter, which remains with OPEC + partners, plays the role of the global oil market swing producer, sees an escalation of attacks on its oil export infrastructure and shipping.
Saudi Arabia said Tuesday that armed drones had attacked two of their oil pump stations. This came just two days after sabotage of two oil tankers carrying Saudi oil near the UAE. Meanwhile, in the midst of an ever-increasing time for word exchange between Washington and Tehran, the US military has said it was braced for "potentially imminent threats to US forces in Iraq" from Iran-backed forces.
Tuesday's attack on the pumping Stations more than 200 miles west of Riyadh and Sunday's attack on four tankers outside the UAE have raised concerns that the US and Iran may force themselves against military conflict. But on Thursday, Trump told the media that he did not want war with Iran.
Also on Thursday, a Saudi-led coalition airstriked on Sanaa, the Yemeni capital. The deadly airstrikes, who allegedly left six dead, came after Yemen's Iran-backed Houthi rebels, who control the capital, claimed responsibility for Tuesday's drone attack on Saudi Arabia's critical oil pipeline. Of course, all this is not lost in global oil markets, which took over 1
Global oil companies are not the only ones to follow closely with increased tensions in the Middle East, and global shipping companies are also considering their next action. On Thursday, London's maritime ship insurance companies met to consider whether they would increase shipping tanker shipping rates in the Arabian Gulf.
But so far they have not been able to reach agreement. The joint war committee, which includes members of the Lloyd's Market Association (LMA), and representatives of other insurance companies, will meet again on Monday to discuss the matter further, said LMA Marine Underwriting Manager Neil Roberts. Related: Peak petrol vehicles are already here
According to reports, the group has not enough information yet to make a decision on possible increases. "At the moment, there are not many facts or verifiable information (on Sunday attacks)," Roberts said Wednesday. "There is no decision to change the listed areas of increased risk.
There are a number of options that do not include changes. He added that any changes would take seven days to take effect." Ships entering the Gulf already have to inform the underwriters; the question is whether the vessels in the Persia Gulf and operation there are also exposed, he says. Last time The Joint War Committee updated the list of high-risk areas in June 2018.
Some already expect an increase in freight rates, including Asian oil refiners who rely on crude imports from the Middle East. Asia achieves about 70 percent of crude oil from the Middle East, while disruptions in oil production or freight routes can affect Asian economies, including China and Japan, the world's second and third largest economies.
Ashok Sharma, chief executive of shipwreck BRS Baxi in Singapore, told Reuters earlier this week "there seems to be no increase in [insurance premiums] even, while he warned that if security in the Gulf region became Exacerbated, insurance companies can remain without choice but to increase marine insurance premiums.
By Tim Daiss for Oilprice.com
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