US Navy to block Iranian crude oil exports
- Sydney (13 April)
The US Navy will blockade all ships entering or leaving Iranian ports from 12am on 14 April – Australian Eastern Standard Time – US Central Command (Centcom) announced today, pushing up crude oil futures prices.
The US plans to target all ships passing through Iranian ports regardless of their national origin, Centcom said. It will not impede the movement of ships entering and leaving non-Iranian ports, Centcom added.
Iran partially closed the Strait of Hormuz when Israel and the US attacked the country in late February. It has targeted dozens of ships attempting to traverse the passage, but allowed vessels from a handful of allied and neutral countries to move out of the Persian Gulf, in exchange for passage fees.
Tankers carrying about 41,500 tonnes of cargo crossed the Strait of Hormuz each day in March, down from 2.6 million tonnes each day a year earlier, estimates from the IMF’s Portwatch monitor show. Portwatch estimates may undercount movements as they are based on data from safety transmitters on ships, which crew members can turn off.
The price of Brent crude futures rose to $102.1/barrel (A$145.1/barrel) after Centcom announced its blockade, from $93.8/barrel late on 11 April, data from Trading Economics show. Brent crude futures were priced at just $72.90/barrel on 27 February, one day before the Iran war began.
Centcom’s blockade notice comes a day after the collapse of Pakistan-brokered peace talks between Iran and the US. The wide-ranging discussions – which included negotiations over access to the Strait of Hormuz – broke down over nuclear proliferation issues.
“We need to see an affirmative commitment that they will not seek a nuclear weapon and they will not seek the tools that would enable them to quickly achieve a nuclear weapon,” US Vice-President JD Vance told reporters on 12 April.
Australia and New Zealand both import refined oil products from Asian markets that have traditionally relied on Persian Gulf exporters for feedstock. Singapore – a major source of Australian and New Zealand fuel – has responded to Hormuz disruptions by finding alternative crude oil suppliers.
Singapore has been able to replace Gulf feedstock with crude oil from Africa and the Americas, Australian Prime Minister Anthony Albanese told the Today Show on 13 April.
Albanese and Singaporean Prime Minister Lawrence Wong agreed to work to maintain the flow of refined oil and LNG between their countries on 10 April. Singapore imports 32% of its LNG from Australia, while Australia imports 26% of its refined fuels from Singapore.
Albanese and Australian Foreign Minister Penny Wong will travel to Malaysia and Brunei from 14 – 17 April to discuss energy, fertiliser, and critical goods flows, the Prime Minister announced today.
Australia is currently at Level 2 of its National Fuel Strategy (NFS) – indicating effective fuel supply chains with localised disruptions. The Australian Federal Government is tasked with adjusting fuel standards, engaging foreign governments, and underwriting fuel purchases at this stage of the NFS.
By Avinash Govind