Attacks on tankers and container ships have also begun to occur in the Arabian Sea.

Attacks on tankers and container ships in the Red Sea, which have become more frequent over the past month, have also begun to occur in the Arabian Sea: on December 22, a drone attacked a tanker heading from Saudi Arabia to India. While previous attacks have been carried out by Yemen’s Houthis, in this case the Pentagon said the drone took off from Iranian territory. The escalation could lead to a further reduction in the flow of ships between the Red and Arabian Seas and an increase in oil prices.

The Israeli-linked chemical tanker Chem Pluto, sailing under the Liberian flag from Saudi Arabia to India, was attacked by a drone on December 22 in the Arabian Sea off the west coast of India, British maritime security company Ambrey said. At the time of the attack, the tanker was 200 km from Veraval, India. The fire on the ship was eventually extinguished, and no casualties were avoided.

This is the first time the attack has occurred in the Arabian Sea and far from the Yemeni coast, where previous Houthi attacks on commercial shipping in the Bab al-Mandeb Strait have originated.

No one has yet claimed responsibility for the attack. However, the Pentagon said on December 23 that, unlike previous attacks, in this case the drone was flying from Iran – also the first such open accusation from the United States.

More than a dozen merchant ships in the Red Sea have been attacked by the Houthis since the conflict between Israel and Palestine escalated. Although the Houthis’ stated target was ships associated with Israel, attacks were also carried out on other carriers. This led to the world’s largest container lines deciding to suspend shipments through the Suez Canal. European oil majors, including BP and Equinor, have taken similar measures. On December 19, the total deadweight of ships passing through the Bab el-Mandeb Strait fell 56% from the daily average for the first two weeks of December to 2.67 million tons, according to the S&P Global Maritime Intelligence Risk Suite. Since mid-December, the price of oil has risen by about $5 per barrel.

Houthi attacks on container ships and tankers in the Red Sea forced shipowners to redirect ships around the Cape of Good Hope, which increased the duration of voyages and the cost of freight, says Mikhail Grigoriev, head of the Gekon consulting center.

The outbreak of attacks in the Arabian Sea poses a more serious threat, he states, both due to the risk of oil supplies to South Asian countries and the impact on the flow of oil from the Persian Gulf as a whole.

Markets in the Western world won’t open until after the Christmas holidays, so the impact will be delayed, but rising prices are almost inevitable, says Victor Katona of Kpler. According to him, Saudi Arabia supplies about 650 thousand barrels per day, or about 6% of seaborne oil imports to Europe, so logistics costs will continue to rise, which, in turn, will put upward pressure on prices. Buyers in Europe are aware that supply delays risk refining disruption, so January loading programs are already sold out: Norwegian benchmark Johan Sverdrup was sold out two weeks earlier than usual in January, he concludes.

Implementa consultant Evgenia Popova admits sharp jumps in quotes in the short and medium term due to fears of an escalation of the operation by Western countries against the Houthis and the expansion of the zone of attacks on tankers in the Arabian Sea. In her opinion, prices will also be affected by the increase in the cost of freight and insurance of tankers. She recalls that the Arabian Sea is a key logistics hub for oil supplies from the Persian Gulf and disruptions could create serious preconditions for an upward price trend.

Dmitry Kozlov