U.S. blames Iran for oil tanker attacks as Gulf tensions climb

By Glen Carey, Verity Ratcliffe and Margaret Talev on 6/13/2019

WASHINGTON and DUBAI (Bloomberg) -- The Trump administration blamed Iran for attacks on two oil tankers near the entrance to the Persian Gulf, escalating tensions between the two rivals despite denials from officials in Tehran that they were behind the incidents.

“The United States will defend its forces, interests and stand with our partners and allies to safeguard global commerce and regional stability,” Secretary of State Michael Pompeo told reporters Thursday in Washington, noting that Iran had previously threatened to curtail oil transport in the Strait of Hormuz.

Senior administration officials said that at least one of the ships was attacked by mines. In a briefing with reporters, they showed a photo of one ship, the “Courageous,” with a hole in its side caused by a mine that exploded, they said, and an undetonated mine lodged inside.

The officials said they did not know for sure whether the mines were Iranian. The U.S. concluded that Iran was responsible for the attack based on intelligence sources and the absence of any better explanation, the officials said. They declined to elaborate on the intelligence sources.

The officials said Iran conducted the attack to demonstrate that it’s not interested in discussions with the U.S. and to escalate the conflict.

Iranian officials have denied any involvement, with Foreign Minister Javad Zarif suggesting that Iran’s enemies may have been behind the attacks and reiterating calls for a regional dialogue.

“Suspicious doesn’t begin to describe what likely transpired,” Zarif wrote on Twitter earlier on Thursday. Pompeo offered no evidence and took no questions from reporters after reading a short statement blaming Iran.

Oil chokepoint

Global benchmark Brent crude jumped almost a dollar a barrel immediately after Pompeo’s remarks, but quickly gave up most of those gains to trade at $61.25/bbl, up 2.1% on the day.

The attacks on Thursday, including an assault on a Japanese-operated vessel, were the second in a month to hit ships near the Strait of Hormuz chokepoint, through which about 40% of the world’s seaborne oil travels. They came as Japanese Prime Minister Shinzo Abe, an ally of Donald Trump who maintains relations with Iranian leaders, visited Tehran in an effort to ease tensions.

The U.S. is confident that the earlier attacks were also the work of Iran, the senior administration officials said. Pompeo said the attacks would be discussed at the United Nations Security Council later on Thursday.

The officials said the U.S. is considering a number of responses, including the possibility of providing naval escorts to commercial ships traveling through the Strait of Hormuz. A U.S. military response hasn’t been ruled out, they said, saying all options are on the table.

The prospects of a conflict have spiked since the Trump administration tightened its sanctions on Iranian oil exports in early May, following the president’s decision a year ago to withdraw from the 2015 Iran nuclear accord.

“The attacks put upward pressure on the probability of a U.S.-Iran conflict in the Gulf (currently 30%),” the Eurasia Group said in a note before Pompeo spoke. “The incidents appear aimed at demonstrating the vulnerability of Gulf shipping while damaging confidence in the U.S. ability to protect freedom of navigation.”

The U.S. last month expedited the deployment of a carrier battle group to the Middle East along with a Patriot missile battery and additional bombers as the Trump administration said it had evidence Iran was threatening attacks on American interests or allies in the region. At the same time, leaders on both sides repeatedly said they are seeking to avoid a war.

Facing economic catastrophe under the U.S.-led sanctions, Iran has threatened to retreat from the multinational nuclear accord unless European parties throw it a lifeline. Iran’s supreme leader, Ali Khamenei, told Abe on Thursday that his country wouldn’t repeat its “bitter experience” of talks with the U.S.

High-stakes diplomacy

The Bahrain-based Fifth Fleet said it received two separate distress signals at 6:12 a.m. and about 7:00 a.m. local time. “U.S. Navy ships are in the area and are rendering assistance,” Commander Josh Frey, a spokesman, said. He couldn’t confirm reports that one of the vessels was struck by a torpedo. Iran said it has rescued 44 sailors.

The manager of one tanker, the Norwegian-owned Front Altair, said it was sailing in international waters when it was damaged by an explosion, and that the incident is being treated as a “hostile attack.” The ship had loaded a cargo of naphtha in Abu Dhabi and was bound for Taiwan, a company official said.

A distress call over VHF radio from the Front Altair said the ship was “under attack and on fire,” said Donald MacLeod, a navigation officer on a vessel about 45 mi away on the Oman Sea. “They had to abandon ship.”

Kokuka Sangyo, the Japanese operator of the other ship, said it was attacked twice, three hours apart, forcing the crew to evacuate. The tanker was carrying 25,000 tons of methanol from Saudi Arabia to Asia. Japanese public broadcaster NHK, citing Kokuka Sangyo’s CEO, said the ship was hit by a shell.

The incidents come a day after Iran-backed rebels in Yemen fired a missile at a Saudi airport, wounding 26 people. The projectile crashed into the arrivals hall, damaging ceilings and windows and causing a fire, though the airport was able to keep functioning with only two flights canceled. Houthi rebels last month hit oil infrastructure hundreds of kilometers inside Saudi Arabia, forcing it to temporarily close an oil pipeline.

Oil tankers last became a target in the Persian Gulf and Arabian Sea during the “Tanker War” in the 1980s -- a sideshow of the Iran-Iraq conflict. From 1981 through 1988, 451 ships suffered some sort of attack in the region from Iraqi or Iranian forces, according to a report from the U.S. Naval Institute.

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