Oil tankers burn as Iranian strikes defy Trump’s claim to have won the war
Prices of the commodity are up almost 10%, returning above US$100 a barrel
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[DUBAI/TEL AVIV/WASHINGTON] Two tankers were ablaze in an Iraqi port on Thursday (Mar 12) after being hit by suspected Iranian explosive-laden boats.
The move marked a step up in attacks that have cut off oil from the Middle East and defied US President Donald Trump’s claim to have won the war he launched two weeks ago.
Images verified by Reuters as having been filmed from the shore of the port of Basra, Iraq, showed ships engulfed in massive orange fireballs that lit up the night sky, after attacks that Iraqi authorities blamed on Iranian boats. At least one crew member was killed.
Hours earlier, three other ships had been struck in the Gulf. Iran’s Revolutionary Guards claimed responsibility for at least one of those attacks: on a Thai bulk carrier, which the Guards said had disobeyed their orders. Another container vessel reported being struck by an unknown projectile near the United Arab Emirates (UAE) on Thursday.
The war that began with a US-Israeli bombing campaign on Feb 28 has so far killed around 2,000 people and caused what the International Energy Agency describes as the biggest disruption to global energy supplies in history.
Global energy supplies disrupted
Undermining US and Israeli claims to have knocked out much of Iran’s stock of long-range weapons, more drones were reported on Thursday flying into Kuwait, Iraq, the UAE, Bahrain and Oman. Lebanon’s Iran-backed militia Hizbollah fired a volley of rockets into Israel – the biggest such strikes of the war so far – prompting fresh Israeli strikes on Beirut.
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Oil prices soared back above US$100 a barrel, having come down earlier in the week when Trump said the war would be over soon. Iran has said it will not let oil through the world’s most important energy trade route – the Strait of Hormuz that runs along its coast – until US and Israeli attacks cease.
Citibank announced on Thursday that it would temporarily shut its branches in the UAE, a day after Iran said it considered banks to be legitimate targets and warned Middle East residents to stay 1,000 metres from them. HSBC has shut branches in Qatar.
Trump says “we won”
Trump, whose Republican Party is trying to hold on to Congress in an election later this year, has repeatedly tried to calm energy markets this week by saying the surge in oil prices will be short-lived.
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But he has not explained how the war will end, or presented a plan to reopen the blockaded strait. US and Israeli officials have said the aim is to destroy Iran’s missile and nuclear programmes, but Trump has also demanded Iran’s “unconditional surrender” and the power to determine its leaders.
“You never like to say too early you won. We won,” Trump told a campaign-style rally in Hebron, Kentucky, on Wednesday. “In the first hour, it was over.”
The US had “virtually destroyed Iran”, he said.
But he added: “We don’t want to leave early, do we? We got to finish the job.”
Inside Iran, residents said that security forces were increasing their presence on the streets, demonstrating their continued control.
“Security forces are everywhere, more than before, teacher Majan, 35, said by phone from Teheran. “People are afraid to come out, but supermarkets are open.”
Three sources told Reuters that US intelligence indicated Iran’s leadership was still largely intact and not at risk of collapse any time soon.
The US and Israel have called on Iranians to rise up and topple their clerical rulers. Many Iranians want change, and some openly celebrated the death of supreme leader Ayatollah Ali Khamenei, whose security forces had killed thousands of anti-government protesters in January, on the war’s first day.
However, there has been no sign of organised anti-government activity while the country is under attack.
Teheran seeks prolonged economic shock
Iran has made clear over the past two days that its strategy now is to impose a prolonged economic shock to force Trump to back off.
The spokesperson for Iran’s military command said on Wednesday that the world should prepare for oil prices of US$200 a barrel. The highest price in history was US$147.27 in July 2008, weeks before the global financial crisis.
Thursday’s surge in oil prices came despite the announcement the previous day that developed countries would release 400 million barrels of oil from their strategic reserves, nearly half from the US.
That is by far the biggest-ever coordinated intervention into the oil markets. Trump said it would “substantially reduce oil prices as we end this threat to America and the world”.
But releasing the reserves will take months and account for just three weeks of supply from the blockaded strait.
Futures contracts two and three months out suggest traders expect prices to ease in the coming months, but far less quickly than they expected just days ago, despite the new promise of hundreds of millions of barrels from reserves.
“The only way to see oil prices trade lower on a sustained basis is by getting oil flowing through the Strait of Hormuz,” ING analysts said. “Failing to do so means that the market highs are still ahead of us.” REUTERS
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