What does the seizure of Greek ships mean for the world oil market?

The seizure of two Greek ships in the Persian Gulf by Iran has serious implications for the global oil market, as it increases the risk of further disruption of transport from an area that is a vital source of global energy supply, warns Bloomberg.

The analysis attributes the seizure of the ships, each loaded with about 1 million barrels of oil, in retaliation by the Iranian Revolutionary Guards for seizing the tanker in Karystos.

"Greece is the nation with the largest fleet of oil tankers in the world, which makes any dispute with Iran potentially serious for the world market," Bloomberg points out. Similarly, about one-fifth of daily crude supplies pass through the Strait of Hormuz, the narrow sea route that separates the Persian Gulf from the Indian Ocean, and crude buyers around the world.

"Charterers need to be more careful," Matt Stanley of Starfuels in Dubai told Bloomberg. "Iran will be extremely protective of all assets."

Greece has warned all Greek ships to "adapt to the unacceptable situation" when sailing in the Persian Gulf. About 27% of the world's oil tanker fleet is Greek-owned, according to data from Clarkson Research Services Ltd.

Brent crude rose 0,5 percent to $ 120 a barrel on Monday, up 1,7 percent on Friday.

The seizure of ships

The two tankers, the Prudent Warrior and the Delta Poseidon, were seized by Iranian forces in the Persian Gulf on Friday. Both are Greek-owned and flagged and were loaded into Iraq, according to tanker tracking data compiled by Bloomberg.

The seizure of the ships came shortly after the Greek authorities stopped a tanker under the Iranian flag and, in coordination with the US authorities imposing sanctions on Iran, seized its cargo.
The Trump administration had re-imposed heavy sanctions on Iran's economy and energy industry after pulling out of the 2015 nuclear deal as part of a strategy to destabilize and weaken the country's leadership, Bloomberg reports.

The Prudent Warrior has since been transported to the Iranian port of Bandar Abbas with all its crew and cargo, George Bakirtzis, managing director of the ship's owner, Polembros Shipping Ltd., told Bloomberg.

Previous incidents

Iran has occupied a British tanker for more than two months in 2019 following the blockade of an Iranian oil tanker in Gibraltar. Both ships were eventually released. Other tankers belonging to Britain, Saudi Arabia and the United Arab Emirates have received hostile approaches in and around Hormuz in recent years, while Iranian ships have been hit in the Red Sea.

"We knew the Iranians would retaliate, we saw it two years ago with the Stena," Bakirtzis said. "Many Greek ships go up and down the Gulf right in front of their door." The captain of a loaded oil tanker could not do much to avoid being caught by a helicopter crew, he added.

The Revolutionary Guards claimed responsibility and warned other Greek vessels in the area, while another 17 Greek ships in the Gulf could also be seized.

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