Combined Maritime Forces on war footing as Iran promises revenge
THE multinational Combined Maritime Forces, a key security coalition in the region, have been ordered to focus solely on war-related operations as Israel and Iran exchange attacks — heightening fears of wider disruption to global shipping and oil markets.
Tehran has vowed revenge after one of the country’s most powerful military commanders and top nuclear scientists were confirmed killed in Israel’s overnight attack.
In response, Iran launched around 100 drones towards Israel, which were all intercepted, the BBC reported. Iran’s leader, Ayatollah Ali Khamenei, said Israel had “prepared for itself a bitter, painful fate, which it will definitely see”.
Shipping, for now, is unaffected by the conflict. But the Combined Maritime Forces, of which the UK, US and Saudi Arabia are members (among others), was stood down from any activities that were not connected to warfare in a briefing this morning, security sources in the region told Lloyd’s List.
Only yesterday, UK Maritime Trade Operations warned shipping of “increased tensions within the region” and advised to vessels to travel with caution through the Middle East Gulf and Straits of Hormuz.
BIMCO chief security and safety officer, Jakob Larsen, said a fully blown conflict between US/Israel and Iran would “most certainly effectively close the Straits of Hormuz”.
But while some shipowners are already choosing to stay away from the region, Larsen said there was currently “no indication that Iran will seek to disrupt shipping in the gulf, and no indication at this point that the Houthis will seek to disrupt shipping in the Red Sea”.
The “tripwire” for shipping, he said, would be the perceived nature of US involvement. An escalation would likely impact freedom of navigation in the Red Sea and Straits of Hormuz, Larsen predicted, and could include missile attacks on shipping and mine-laying.
For now though, it’s business as usual in terms of oil supply, Fearnleys said, barring significant escalation.
The attacks could even spur risk premiums for cargoes lifted in the Middle East Gulf region, the shipbroker said, and a tightening of supply if fewer owners are willing to call at ports in the area. Those premiums might spark east-west arbitrage too, Fearnleys said, supporting more long-haul tanker trade.
Asian shipping stocks — particularly those tied to tankers and containerships — immediately surged, with investors all but reflexively betting that every new conflict spells good news for the industry. Most of them held on to their gains at the close, albeit with some paring back.
In fact, US tanker shares had already begun to climb a day earlier, tracking the spike in oil prices after US President Donald Trump hinted that an Israeli strike “could very well happen” and ordered the evacuation of some American diplomats from the region.
According to a Thursday report from Pareto Shipbrokers, about 135 very large crude carriers are dedicated to hauling Iranian oil that is under US sanctions. With an average age approaching 20 years, these vessels would struggle to find alternative employment.
“Consequently, a drop in seaborne crude oil exports of around [1m barrels per day] from Iran would possibly boost demand for ‘legitimate’ VLCCs by about 3%-4%, depending on the region,” it added.
In a Friday update, Pareto said that as the situation escalates, it expects Chinese buyers to “immediately” start looking for replacements for Iranian cargo. This is expected to add demand for 25 to 50 VLCCs to the mainstream market.
“Again, we would expect a relatively imminent impact on VLCC FFAs, and this will once again highlight the ‘energy security’ element that we believe should be priced into crude tanker names.”
Tanker rates are expected to soar in the near term as panic takes hold, but if a closure really does choke off supply, what starts as a boom could quickly turn into a bust.
The likelihood of a full closure of the Straits of Hormuz, the shipbroker said, was at the moment “very limited”.
But this latest escalation reduced further any faint hope that the Red Sea would return to normal any time soon, which could spell good news for the container sector.
The logic behind the rally in container shipping stocks and futures is much shakier than its tanker counterpart.
The sector is already facing a severe glut of vessels. Right now, bullish sentiment seems to be driven less by fundamentals and more by investors’ knee-jerk belief that any external disruption will somehow lift freight rates.
Undeniably, the pandemic, Red Sea crisis and, most recently, US tariffs have all brought market booms, albeit to varying extents. But the core driver was them causing, at least temporarily, a massive loss of capacity and/or cargo surge.
“I do not see any incremental impact yet from the Middle East conflicts on container shipping,” says Johnson Leung, co-founder of Linerlytica. “Rates will only increase if there’s simply more cargo than ships.”
Certainly, carriers now have another convenient justification to prolong the rerouting around Africa that started from the end of 2023, preventing another 9%-10% capacity from swamping an already oversupplied market.
But this does not constitute a bullish catalyst on its own, Leung adds. Rates have been weak since last December, with the expectation of the recent tariff-driven yet short-lived rebound on transpacific trade.
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