Maritime Report

May 3, 2024

Middle East tensions to impact tanker market

Nigeria’s fuel import bill rises by 42% to N1.09trn in six months

THE tanker market is bound to be further impacted by the escalation of the Middle East tensions. In its latest weekly report, shipbroker Xclusiv said that “news of an Israeli strike on Iranian territory, potentially escalating tensions in the Middle East, sent shockwaves through global markets.

Geopolitical uncertainties loom large, capable of swiftly altering the trajectories of commodities such as oil, and reigniting concerns over inflation. Although oil prices took a rollercoaster ride on Friday, with WTI climbing to USD 86/barrel, reports suggested the attack was less extensive than initially.

According to the shipbroker, “rising tensions in the Middle East and stricter sanctions against Iran could impact the supply of LPG, posing risks to Iranian exports. Concurrently, ongoing cuts by OPEC+ are further limiting outflows from the region. Iran, a significant player in the LPG market, saw exports of around 1,000,000 metric tons in March, with April’s volumes currently standing at 600,000 metric tons. 

Following Iran’s actions against Israel, the US is set to impose additional sanctions on the country. Additionally, legislation aimed at obstructing China’s consumption of Iranian crude oil has been passed with strong support. 

In light of these developments, concerns have arisen regarding how stricter US sanctions could impact oil supply and potentially disrupt LPG flows. Despite rising tensions between Israel and Iran, China’s independent refineries are expected to keep buying Iranian crude. 

As the US imposed new sanctions on Iran’s drone program and hinted at potential oil export sanctions, China’s independent refiners, which rely heavily on Iranian oil (accounting for 40-50% of their imports), have found ways to keep these purchases flowing”, Xclusiv said.