Khalid al-Falih, the energy minister of the world’s largest crude oil exporter and OPEC’s biggest producer, Saudi Arabia, urged on Thursday countries buying crude oil to secure the free navigation of tankers in the Strait of Hormuz.
The Strait of Hormuz near Iran is the most important oil chokepoint in the world with daily oil flows averaging 21 million bpd, or the equivalent of 21 percent of global petroleum liquids consumption.
Several high-profile incidents in recent weeks and months have raised the tensions between Iran and the West in the Middle East, the latest being Iran seizing a British-flagged oil tanker last week, in what appears to be in retaliation for the seizure of an Iranian oil tanker by Gibraltar, with the help of the UK Royal Marines, earlier this month.
Speaking in India on Thursday, Saudi Arabia’s al-Falih said, as carried by Reuters:
“We, of course, call on the international community and have discussions with my counterpart Minister Pradhan today that India also needs to do its part of securing free navigation of sea links transporting energy to the rest of the world.”
During the meeting with Saudi Arabia’s al-Falih, India raised concerns about the recent increase in Asian Premium pricing of OPEC oil, “disturbances in the Strait of Hormuz impacting the movement of oil/LNG tankers and the decision of OPEC Plus members on extending production cuts leading to oil price volatility & its adverse impact on the Indian economy,” India’s Petroleum Minister Dharmendra Pradhan tweeted. Related: Hedge Funds Unexpectedly Set The Stage For An Oil Rally
Even before the most recent Iran-UK tension flare-up, U.S. President Donald Trump said at the end of June that countries that get their crude oil via the shipping routes in the Middle East should protect their own ships along the lanes.
After Iran seized a British tanker on Friday, a UK government spokesman said today that “The Royal Navy has been tasked to accompany British-flagged ships through the Strait of Hormuz, either individually or in groups, should sufficient notice be given of their passage.”
“This move will provide some much needed safety and reassurance to our shipping community in this uncertain time. However, we will continue to push for a de-escalation of tensions in the region and the safe return of our seafarers,” the spokesman added, as carried by the BBC.
By Tsvetana Paraskova for Oilprice.com
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