US vows insurance, escorts as oil, gas flows disrupted

• Crisis deepens as US sub sinks Iranian warship off Sri Lanka, killing 87
• Hormuz shipping paralysed for fifth day; traffic plunges 90pc
• Major shipping firms halt transits; insurers withdraw war-risk cover
• Qatar halts LNG liquefaction; S. Arabia reroutes crude via Red Sea

LONDON: The US Iran war widened on Wedne­sday after a US strike hit an Iranian warship off Sri Lanka, deepening a crisis that has paralysed shipping through the Strait of Hormuz for a fifth day and choked off vital Middle East oil and gas flows.

The US submarine stri­ke on the Iranian vessel, which killed 87 sailors, came as US President Donald Trump pledged to provide insurance and navy escorts to ships expo­rting oil and gas from the Middle East in a bid to contain soaring energy prices.

However, the world’s top shipping companies have announced they will not send their vessels through the Strait of Hormuz and major insurers have pulled war risk coverage.

The energy market inte­l­l­igence firm Kpler said on Wednesday that oil tanker traffic through the Strait of Hormuz has plunged but not completely halted following the outbreak of the war. “Analysis of vessel activity indicates tanker tr­­a­nsits are now around 90pc lower than last week” thr­ough the vital waterway.

At least 200 ships, including oil and liquefied natural gas tankers as well as cargo ships, remained at anchor in open waters off the coast of major Gulf producers including Iraq, Saudi Arabia and Qatar, according to Reuters estimates based on ship-tracking data from the Mar­ineTraffic platform.

Hundreds of other vessels remained outside Hor­muz unable to reach ports, shipping data showed. The waterway is a key artery for around a fifth of the world’s oil and LNG supply.

The Maltese-flagged container ship Safeen Prestige was also damaged by a projectile as it sailed towards the northern end of the Strait of Hormuz earlier, prompting the crew to abandon ship, shipping sources said.

The crisis has disrupted oil and natural gas exports from the Middle East. Qatar will fully shut down gas liquefaction on Wednesday and won’t return to normal production and exports for at least a month, two sources familiar with the matter told Reuters. Gas giant QatarEnergy declared force majeure on shipments of LNG after attacks on its production facilities.

Iraq, Opec’s second-largest producer, has cut nearly 1.5 million barrels per day — about half of its output — due to storage limits and the lack of an export route, officials said. They said the country may have to shut 3m bpd, nearly all of its output, within days if exports do not resume.

Saudi Arabia, the world’s top oil exporter, suspended output at its 550,000 bpd Ras Tanura refinery and has begun rerouting crude loadings from eastern ports to Yanbu on the Red Sea. The refinery was struck again on March 4, without sustaining damage, the Saudi defence ministry said.

Israel and Iraq’s Kurdistan region also curtailed parts of their oil and gas production.

There was also a fire caused by debris at the UAE’s Fujairah port, a key global oil storage and bunkering hub. The UAE and Kuwait were struggling to load oil, but it was not yet clear if they cut output.

As for consumers, refiners in China are shutting crude units or advancing planned maintenance due to disrupted crude flows.

India is looking for substitute sources of crude, LPG and LNG to prepare itself if the crisis extends beyond 10-15 days, a government official said. Indonesia plans to increase US crude imports to offset reduced Middle East supply.

Cargoes from Brazil, West Africa and the US are possible but take over a month to reach Asia and are costlier amid soaring freight rates, traders said.

Rare tanker transit

Despite the gridlock, a rare voyage took place on Tuesday when the Suezmax tanker Pola sailed through the Strait of Hormuz to the UAE to load crude, according to industry sources and LSEG ship-tracking data.

The Pola had switched off its AIS transponder late on March 2 as it approached the Strait and reappeared the next day off Abu Dhabi.

Trump said on Tuesday he had instructed the US International Development Finance Corporation to provide political-risk insurance and financial guarantees for maritime trade in the Gulf.

“No matter what, the United States will ensure the free flow of energy to the world,” he wrote in a social media post.

Oil prices dipped on Wednesday but were up 12 per cent since the war started on Saturday. On Wednesday, Goldman Sachs raised its forecast for Brent crude oil in the second quarter by $10 to $76 per barrel. It also raised its prediction for WTI by $9 to $71 per barrel.

Some Asian refiners and petrochemicals companies face output cuts because they are unable to get prompt replacement cargoes from their suppliers in the Gulf due to the shipping standstill.

India’s Mangalore Refinery and Petrochemicals and Petronet LNG both issued force majeure notices due to the disruptions.

The European Union has warned member states about soaring gas prices caused by the Iran crisis but saw no immediate threat to supplies and was not planning an emergency response, officials told Reuters on Wednesday.

Published in Dawn, March 5th, 2026

from Dawn - Home https://ift.tt/0jEzIdw