Uche Cecil Izuora
The United States (US) has issued fresh guidance on Monday to commercial vessels transiting the Strait of Hormuz, a key shipping lane for Middle East oil supplies, as tensions simmered between Washington and Tehran over Iran’s nuclear program.
Iran has in the past threatened to close down the Strait of Hormuz, a portion of which lies within its territorial waters, and has at times seized commercial ships and oil tankers moving through the area alleging smuggling.
The U.S. Department of Transportation’s Maritime Administration advised U.S.-flagged commercial vessels to stay as far from Iran’s territorial waters as possible and to verbally decline Iranian forces permission to board if asked, according to the guidance.
“It is recommended that U.S.-flagged commercial vessels transiting these waters remain as far as possible from Iran’s territorial sea without compromising navigational safety,” according to the guidance posted on its web site.
It also said crews should not forcibly resist Iranian forces if they board.
“If Iranian forces board a U.S.-flagged commercial vessel, the crew should not forcibly resist the boarding party,” it said. Iran’s top diplomat said on Friday that nuclear talks with the U.S. mediated by Oman were off to a good start and set to continue, in remarks that could help allay concern that failure to reach a deal might nudge the Middle East closer to war.
While both sides have indicated readiness to revive diplomacy over Tehran’s long-running nuclear dispute with the West, Washington has said it also wants the talks to cover Iran’s ballistic missiles, support for armed groups around the region, and human rights.
President Donald Trump ratcheted up the pressure on Iran on Friday with an executive order imposing a 25% tariff on imports from any country that “directly or indirectly” purchases goods from Iran, following through on a threat he made last month.
Meanwhile, oil prices were stable on Monday after the U.S. and Iran pledged to continue indirect talks, easing oil supply fears, but India stepping away from Russian purchases gave prices a floor and global stock markets rallied.
Brent crude oil futures were up 6 cents, or 0.1 per cent, at $68.11 a barrel, while the U.S West Texas Intermediate crude rose 5 cents, or 0.1 per share, to $63.60.
Last week Brent and WTI fell more than 3 per cent and 2 per cent respectively, their first decline in seven weeks, as Iran tensions eased amid a broader market selloff led by equities, which often move in tandem with oil prices.
Iran and the U.S. pledged to continue talks after what both sides described as positive discussions. That eased concerns that a failure to reach a deal might nudge the Middle East closer to war, as the U.S. has positioned more military forces in the area.
About a fifth of the oil consumed globally passes through the Strait of Hormuz between Oman and Iran.
However, Iran’s foreign minister said the country will strike U.S. bases in the Middle East if attacked by U.S. forces.
“The Iranian risk premium cannot be fully defused as long as U.S. warships are located where they are,” said SEB analyst Bjarne Schieldrop.
Investors are also grappling with Western efforts to curb Russia’s income from oil exports that support its war in Ukraine. The European Commission has proposed a sweeping ban on any services that support Russia’s seaborne crude oil exports.
Refiners in India, once the biggest buyer of Russia’s seaborne crude, are avoiding purchases for delivery in April, sources said. If India fully stopped Russian purchases “this would be a sustained bullish development,” said Sparta oil market analysts.
Meanwhile in Kazakhstan, the giant Chevron led Tengiz oil field has recovered to around 60 per cent of peak production and aims to reach full output by February 23, sources said.