More tankers come under attack as US-Iran conflict spreads in the region

More tankers come under attack as US-Iran conflict spreads in the region

By Jonathan Saul and Anna Hirtenstein

Escalation of Conflict and Impact on Oil Shipping

March 5 (Reuters) - More tankers came under attack in Gulf waters on Thursday as the U.S.–Iran war escalated, and Iranian drones entered Azerbaijan, threatening to spread the crisis to more oil producers in the region.

Details of Recent Attacks

A Bahamas-flagged crude oil tanker was targeted by an Iranian remote-controlled boat laden with explosives while anchored near Iraq's Khor al Zubair port, according to initial assessments. A second tanker at anchor off Kuwait was taking on water and spilling oil after a large explosion on its port side.

Number of Vessels Attacked

Nine vessels have come under attack since the conflict broke out between the U.S., Israel and Iran on Saturday. Iran launched a wave of missiles at Israel early on Thursday and also sent drones into Azerbaijan, injuring four people.

Political Developments

The escalation comes after a motion to halt the U.S. attacks was blocked in Washington and as the son of Iran's slain supreme leader emerged as a frontrunner to succeed him, suggesting Tehran was not about to buckle under the pressure.

Shipping Disruptions in the Gulf

Around 200 ships, including oil and liquefied natural gas tankers as well as cargo ships, remained at anchor in open waters off the coast of major Gulf producers, according to Reuters estimates based on ship-tracking data from the MarineTraffic platform. 

Strait of Hormuz Blockage

Hundreds of other vessels remained outside the Strait of Hormuz unable to reach ports, shipping data showed. The waterway is a key artery for around a fifth of the world's oil and LNG supply.

International Response and Insurance Measures

U.S. President Donald Trump offered U.S. navy escorts and insurance in a bid to restart shipping flows and curtail energy prices. Insurance market Lloyd's of London said on Thursday it is engaging with the U.S. government on a plan.

Impact on Oil Production and Refineries

Evacuations and Production Cuts

BP evacuated foreign staff from Iraq's Rumaila oil field after two unidentified drones landed inside the field, according to Iraqi oil sources. Baghdad has cut its oil production by nearly 1.5 million barrels a day as the country ran out of storage and was unable to load tankers, officials told Reuters.

Refinery Shutdowns

A refinery in Kuwait shut down and another reduced its processing rate. A third refinery in Bahrain also cut its output.

Oil and Gas Price Surge

Oil Prices Jump Again

Oil prices extended their rally on Thursday, climbing around 2%. They have risen 15% since the war started on Saturday, as U.S.-Israeli strikes on Iran disrupted Middle East supplies.

European Gas Prices

A benchmark European gas price also gained 2% on Thursday. It has surged around 50% this week so far.

Russia and Qatar's Role

Russia's President Vladimir Putin said that Russia could halt gas supplies to Europe right now, amid the spike in energy prices from the Iran crisis.

Qatar, which provides 20% of the world's LNG supply, halted gas production earlier this week due to the conflict. Other major producers such as the U.S. and Australia have little spare capacity to offset this lost supply, according to Reuters calculations and industry analysts.

European and Asian Import Challenges

The EU's task of refilling its gas storage in the coming months has become riskier and more expensive due to the Iran conflict and disrupted LNG supplies. It still imports some gas from Russia, planning to end pipeline supply by late 2027 and ban new short-term LNG contracts from late April 2026.

Asian importers came under further pressure from the disruptions in supply from the Middle East. China asked refiners not to sign new contracts to export fuel and to try to cancel shipments already committed, several people with knowledge of the matter said on Thursday.

(Reporting by Jonathan Saul in London; Additional reporting by Nailia Bagirova in Baku, Aref Mohammed in Basra and Ahmed Rasheed in Baghdad; Writing by Anna Hirtenstein; Editing by Susan Fenton)