By Golnar Motevalli, Arsalan Shahla and Yasna Haghdoost
“The market has been entirely too complacent given that we are one security incident away from a war,” said Helima Croft, chief commodities strategist at RBC Capital Markets.
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.
A spokesman for the National Iranian Tanker Company, initially said in a call with Iran’s Press TV that the missiles probably came from the direction of Saudi Arabia. NITC later withdrew that claim in a statement.
The ship was hit twice within a 30-minute interval from the east of the Red Sea near its crossing route, Foreign Ministry spokesman Abbas Mousavi said on Telegram. The Saudi Ports Authority confirmed that an incident involving a tanker had occurred near the port of Jeddah overnight, but was unable to verify if the vessel was Iranian, according to a press officer.
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. No one has provided any assistance to the damaged ship, Al-Alam news channel reported citing Nasrollah Sardashti, head of NITC.
The Sabiti was fully laden with crude and heading toward the Suez Canal and the Mediterranean Sea, according to Florian Thaler, chief executive of data analytics firm OilX. On it’s previous voyages it has carried Iranian crude to the East Mediterranean he said.
According to tanker-tracking data compiled by Bloomberg, the vessel was under way using its engine and heading south at a speed of 9.6 knots as of 8:45 a.m. London time. Its destination was listed as Larak, an Iranian island in the Strait of Hormuz.
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.
In an interview with CBS’s “60 Minutes” last month, Saudi Crown Prince Mohammed Bin Salman warned that conflict between his country and Iran would lead to a “total collapse of the global economy” and should be avoided. The Foreign Ministry of China, which gets a significant proportion of its oil imports from the Persian Gulf, urged restraint on Friday in order to safeguard peace and stability in the area.
The attack on the Sabiti came a day before Pakistani Prime Minister Imran Khan is scheduled to visit Tehran for talks on how to reduce tensions with Saudi Arabia, Iranian lawmaker and member of the parliamentary commission for national security, Heshmattolah Falahatpisheh, said in an interview with the semi-official Iranian Labour News Agency. Khan was one of several leaders who unsuccessfully tried to broker dialogue between Trump and Iranian President Hassan Rouhani at the United Nations General Assembly last month.