In Gulf Tanker Crisis, Iran Tries to Avoid Alienating Allies

In Gulf Tanker Crisis, Iran Tries to Avoid Alienating Allies
Benoit Faucon Aug. 8, 2019

Indian crews and China-bound oil are caught up in Tehran’s retaliation over Trump administration’s sanctions

Iran’s disruptions of Persian Gulf oil shipments are putting the country’s leaders in a difficult position as they retaliate against foes while trying not to irritate their few remaining allies.

Tehran captured two U.K.-connected vessels in the Persian Gulf on July 19, two weeks after Britain seized an Iranian oil tanker near Gibraltar it accused of exporting oil to Syria in breach of European Union sanctions. Iran, which had threatened to respond to its vessel’s seizure, also detained an Emirati-based ship it accused of smuggling.

The seizures were in keeping with Iran’s vow to disrupt maritime traffic in the Strait of Hormuz as a retaliatory show of force to the U.S., after it banned Iranian oil exports, the lifeblood of its economy. The U.K., though it is working with other European countries to salvage the international nuclear deal with Iran, was singled out by Tehran as a target after the Gibraltar incident and now faces the same threat as adversaries like the U.S., Saudi Arabia and the United Arab Emirates.

But Iran’s strategy has also vexed the country’s remaining trade partners, including India, China and Iraq. Dozens of crew members aboard the seized ships have been Indian and one of the ships temporarily seized was chartered by China. On Sunday, Iran said it had seized an Iraqi vessel it accused of smuggling, at a time when Baghdad is becoming a key trade partner of Tehran’s and one of its backchannels with the West.

“It’s like mutual-assured destruction. Everything is a potential collateral damage,” said Helima Croft, chief commodities strategist at Canadian broker RBC. “You think you get a British tanker and you get an Indian crew.”

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