Oil prices surge after Gulf of Oman tanker attacks

The Saudi oil tanker Al-Marzoqah was one of the four ships damaged in alleged ‘sabotage attacks’ a month earlier off the coast of Fujairah. (AFP)
Updated 13 June 2019

Oil prices surge after Gulf of Oman tanker attacks

  • The attacks took place to the east of the Strait of Hormuz, a major strategic waterway for world oil supplies, raising fears of disruption to the global energy trade
  • They come at a time of heightened tensions over Iran’s activities in the region and after Tehran has repeatedly threatened to disrupt shipping in and out of the Arabian Gulf

LONDON: Twin attacks on tankers in the Gulf of Oman, close to the world’s biggest energy chokepoint, sent oil prices surging by as much as 4.5 percent on Thursday.

The attacks took place to the east of the Strait of Hormuz, a major strategic waterway for world oil supplies, raising fears of disruption to the global energy trade. 

They come at a time of heightened tensions over Iran’s activities in the region and after Tehran has repeatedly threatened to disrupt shipping in and out of the Arabian Gulf.

Benchmark brent crude prices were up by 1.8 percent to $61.06 at around 4 p.m. GMT, having risen as much as 4.5 percent earlier in the day.

Thursday’s attacks involved the Front Altair, which caught fire in between the coast of Iran and the UAE after an explosion, and the Japanese-owned Kokuka Courageous, which was abandoned after being hit by a suspected torpedo.

The incidents follow the “sabotage” of four commercial vessels off the coast of the UAE’s Fujairah port last month.

Robin Mills, CEO of consultancy Qamar Energy, told Arab News that Thursday’s attacks were “considerably” more serious than the Fujairah incident. 

“Security will no doubt be beefed up, but it will have to be extended further if there is any repetition of such an attack,” he said. 

The impact on oil prices came despite global exporters having the capacity to boost production if needed, Mills added. 

“On the overall market, demand growth is weakening and there is plenty of spare capacity, but most of this is in the Gulf, of course. So (it is) not surprising we saw the price response,” he said. 

Andy Lipow, an analyst at Lipow Oil Associates in Houston, said the attacks could have a further knock-on impact on the market, notably on insurance risk premiums. 

“These types of attacks have always been a concern,” he told Reuters.

“But the impact of tanker owners not chartering their vessels and insurance companies potentially refusing to provide coverage could further exacerbate the supply problem.”


Lebanon central bank reassures foreign investors about deposits

Updated 25 January 2020

Lebanon central bank reassures foreign investors about deposits

  • Khalaf Ahmad Al-Habtoor asked if there was any risk to dollar deposits
  • The heavily indebted country’s crisis has shaken confidence in banks

BEIRUT: Lebanon’s central bank said on Saturday there would be no “haircut” on deposits at banks due to the country’s financial crisis, responding to concerns voiced by a UAE businessman about risks to foreign investments there.

Emirati Khalaf Ahmad Al-Habtoor, founder of the Al-Habtoor Group that has two hotels in Beirut, posted a video of himself on his official Twitter account asking Lebanon’s central bank governor if there was any risk to dollar deposits of foreign investors and whether there could be any such haircut.

“The declared policy of the Central Bank of Lebanon is not to bankrupt any bank thus preserving the depositors. Also the law in Lebanon doesn’t allow haircut,” the Banque Du Liban (BDL) said in a Twitter post addressed to Al-Habtoor, from Governor Riad Salameh.

“BDL is providing the liquidity needed by banks in both Lebanese pound and dollars, but under one condition that the dollars lent by BDL won’t be transferred abroad.”

“All funds received by Lebanese banks from abroad after November 17th are free to be transferred out,” it added on its official Twitter account.

The heavily indebted country’s crisis has shaken confidence in banks and raised concerns over its ability to repay one of the world’s highest levels of public debt.

Seeking to prevent capital flight as hard currency inflows slowed and anti-government protests erupted, banks have been imposing informal controls on access to cash and transfers abroad since last October.

A new government was formed this week, and its main task is to tackle the dire financial crisis that has seen the Lebanese pound weaken against the dollar.

Al-Habtoor had asked Salameh for clarity for Arab investors concerned about the crisis and those thinking of transferring funds to Lebanon to try to “help the brotherly Lebanese.”