Maritime Risk in Persian Gulf is Escalating

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--With Iranian and Israeli air strikes continuing, maritime risk group Dryad Global warned Wednesday that electronic disruptions to shipper signaling could lead to "catastrophic" consequences for Western vessels.

Israeli forces on Friday launched a pre-emptive strike on Iran, sparking a missile offensive from both sides. As U.S. military assets move toward the Middle East, President Donald Trump has called for Iran's unconditional surrender.

Iran had managed to break through Isreal's Iron Dome air defense system to hit targets in Tel Aviv and elsewhere, though they're no match for the U.S.-supplied arsenal from Isreal. The Israeli forces have managed to destroy above-ground infrastructure supporting Iran's nuclear program, though Iran was able to knock out a refinery in Haifa.

IIR Energy reported earlier this week that Bazan Group (Haifa, Israel) shuttered its refinery in Haifa due to a power outage sustained during an Iranian missile strike. It could be down until at least June 25, sidelining some 197,000 barrels per day (BBL/d) in the process.

Dryad Global, a maritime risk consultancy, said Wednesday that the Persian Gulf and the Strait of Hormuz remain open to vessel traffic, though volume is down considerably since Israel launched its opening salvo on Friday.

"Transits of cargo-carrying vessels dropped from 147 on June 9 to just 111 by June 15 - an indication that shipowners are adopting a more cautious approach amid rising geopolitical risks," Dryad Global warned on Wednesday.

The U.K. Maritime Trade Operations office had warned earlier this week that shippers in the region may experience electronic interference that could interrupt their AIS signal, which serves to pinpoint a vessel's location.

"Particularly vulnerable are vessels with perceived affiliations to the U.S., U.K., France or Israel, where misidentification could be catastrophic, especially in high-traffic areas with disrupted AIS visibility such as the waters north of Dubai and Sharjah," Dryad Global added.

Regional shipping has already been threatened by attacks from the Houthi rebel group, an Iranian proxy in control of Yemen. Dryad Global counted 55 attacks from the Houthis since November 2023, and any escalation to the conflict could have severe disruptions to regional maritime chokepoints.

Elsewhere, crude oil prices had been suppressed for much of the first quarter amid concerns that protectionist trade policies from the United States would undermine global growth, with groups from the International Energy Agency to the Organization for Economic Cooperation and Development warning of the potential impact.

Oil prices had dipped into the $50 range early this year. But by Wednesday, the price for Brent crude oil, the global benchmark, was moving toward the $80 mark amid concerns of escalating conflict in the Middle East. Markets were otherwise flat ahead of the expected rate decision from the U.S. Federal Reserve.

Iran is a founding member of the Organization of the Petroleum Exporting Countries (OPEC), claiming some of the world's largest deposits of oil and natural gas. Though sanctions limit trade for Iran, secondary sources reporting to OPEC economists put oil production at 3.3 million BBL/d on average during the first quarter, up from 2.8 million BBL/d for 2023.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).