Iran says targeting Western-linked ships at Hormuz, denies full closure

Iran has claimed it is restricting passage through the Strait of Hormuz only for vessels linked to Western nations and Israel rather than fully closing the critical energy chokepoint, as maritime traffic remained severely disrupted and regional oil exporters explored using stranded tankers for floating storage.

The Islamic Revolutionary Guard Corps said vessels belonging to the US, Israel, European countries and their supporters would not be permitted to transit the waterway, the country's semi-official Tasnim news agency reported March 5.

The move has effectively halted tanker movements through a strait that last year handled shipments of 15 million barrels/day of crude and 5 million b/d of oil products, mainly destined for Asian buyers, according to S&P Global Commodities at Sea data.

"We are blamed by some who say Iran has shut down the Strait of Hormuz. We basically do not believe in closing the Strait," Islamic Revolutionary Guard Corps' brigadier general, Kiyoumars Heydari, said on state television. "We deal with the sailing vessels in accordance with international protocols."

IRGC separately said in a statement that "vessels belonging to the US and the Zionist regime and European countries and their supporters" will not be permitted to transit, Tasnim reported.

The remarks came after Iranian forces claimed to have hit at least 10 ships since the US-Iran war broke out on Feb. 28. The UK Maritime Trade Operations has recorded 12 maritime security incidents in the same timespan.

The ships, attacked in the Persian Gulf and the Gulf of Oman, do not all have clear Western and Israeli links, and the International Maritime Organization and some industry associations have urged shipping companies to avoid the conflict zones if possible.

CAS ship-tracking data shows no oil and chemical tanker transits via Hormuz on March 4, but some tankers are sailing eastwards to the key waterway as of midday March 5.

A small number of tankers sailed westwards into the Persian Gulf earlier this month, including the ballast LR1 product tanker Kavomaleas, destined for Jubail.

Daily tanker transits exceeded 50 in the week before the war. Gulf oil exporters shipped some 15 million barrels/day of crude and 5 million b/d of oil products through the Strait of Hormuz last year, mainly to Asian buyers, CAS data shows.

Floating storage

With onshore storage facilities across the region filling up due to a lack of exports, some industry participants said tanker operators with empty ships in the Gulf are exploring opportunities to store refined products.

CAS records 11 ballast LR2-sized, 17 LR1 and 51 MR tankers within the Gulf as of March 4. The ships could carry up to 38 million barrels of refined products when fully utilized.

"There is potential if the ship is unoccupied, it's not under fixture, it's in ballast and it's within the AG [Persian Gulf]," said Svetlana Lobaciova, an analyst at Gibson Shipbrokers. "But you have to also consider freight rates are extremely high at the moment."

Platts Global Clean Tanker Index for non-scrubber, non-eco ships stood at $67,420.32/d on March 4, up from $38,131.69/d on Feb. 27. Platts is part of S&P Global Energy.

Fotios Katsoulas, an analyst at S&P Global Energy CERA, said tanker operators might not necessarily be seeking to match potential spot earnings if the ships could not move out of the Gulf.

"They would not be at the crazy levels we see for major routes," Katsoulas said.