Saudi state oil tanker company suspends shipments through Hormuz

Saudi Arabian oil tanker company Bahri has announced a temporary suspension of shipments through the Strait of Hormuz, reported the Wall Street Journal and the Financial Times, citing two unnamed sources familiar with the matter. The statement came after Iranian missile strikes on US military bases in Iraq.

The decision by the state-backed company could restrict oil shipments from Saudi Arabia, which remains the world’s largest crude exporter. Saudi Arabia largely relies on its own tankers to move its oil and most of Saudi Arabia’s crude-oil exports pass through the Strait of Hormuz.

The suspension could be short-term as Saudi Arabia apparently was assessing the threat in the aftermath of the missile strikes last Wednesday January 8th. The US response appears to have been economic rather than military, but Iran’s admission on Saturday January 11th that it was responsible for the downing of a Ukrainian Airways airliner has served to increase domestic tensions in the sanction-hit state.

Bahri did not confirm or deny the decision.

Richard Matthews, head of research at Gibson shipbrokers. Told the FT that. “beyond the obvious heightened risk, most people are in wait-and-see mode. We haven’t seen a significant shift in tanker rates or insurance rates yet, but it is still very much early days.”

A 750-mile pipeline running from the east of Saudi Arabia to the port city of Yanbu in the west has a capacity of around 5m barrels a day and Saudi Arabia has spoken in the past of expanding it, but the vast majority of the kingdom’s roughly 7m bpd of exports sail from the east of the country.