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BP : Iranian Ships Try to Block U.K. Tanker in Strait of Hormuz -- 5th Update

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07/11/2019 | 02:59pm EDT

By Rory Jones in Dubai and Max Colchester in London

A British warship trained its guns on three Iranian vessels that tried to block the passage of a U.K.-flagged oil tanker into the Strait of Hormuz, the country's Defense Ministry said, a confrontation that comes amid heightened tensions between Washington and Tehran.

The three Iranian ships tried on Wednesday to impede the British Heritage as the tanker carrying oil for British oil giant BP PLC traveled from the Persian Gulf into the Strait, but were turned away by the HMS Montrose, the ministry said on Thursday. The event followed British forces' seizure of an Iranian tanker off the Gibraltar coast last week, which Iran called an act of piracy.

The U.S. and U.K. have accused Iran's Islamic Revolutionary Guard Corps of mounting assaults on vessels carrying oil through the Strait of Hormuz in recent months. However, Wednesday's incident marks the first time since tensions flared earlier this year between the U.S. and Iran that a Western warship has come close to military engagement with Iranian naval forces.

Sepahnews.com, an Iranian news website tied to the Islamic Revolutionary Guard Corps, a powerful military group in Iran, denied the unit's forces had tried to detain the ship.

The British government didn't identify the types of Iranian vessels involved and didn't accuse the ships of seeking to seize the tanker.

The U.S. military was aware of the incident, said Navy Capt. Bill Urban, a spokesman for the U.S. Central Command. "Threats to international freedom of navigation require an international solution. The world economy depends on the free flow of commerce, and it is incumbent on all nations to protect and preserve this linchpin of global prosperity."

The incident could accelerate a U.S. attempt to build a coalition of states to share the burden of protecting commercial vessels near Iranian waters. It could also further rattle the oil market and destabilize shipping through the Strait of Hormuz, through which about a third of the world's seaborne crude moves from countries such as Iraq, Saudi Arabia and the United Arab Emirates.

Front-month West Texas Intermediate futures recently were up 0.5% to $60.74, while Brent futures were 0.6% higher at $67.40.

Iran and the U.S. have been locked in a bitter standoff since the spring. The White House last year pulled out of a 2015 agreement that sought to contain Iran's nuclear capabilities and in April said it would use sanctions to force " Iran's oil exports to zero." The Trump administration has slapped sanctions on Iranian individuals and institutions, including the IRGC, in an effort to force Tehran to cease aggressive activities in the Middle East and negotiate a new nuclear pact.

Tehran has responded by taking steps to breach the 2015 agreement and modestly expand its nuclear program.

Iranian officials have threatened to retaliate, with one senior official suggesting seizing a British ship in the Persian Gulf after U.K. forces last week helped commandeer an Iranian ship off the coast of Gibraltar. That ship was carrying oil bound for Syria in what U.K. officials said breached European Union sanctions on sales of oil to the country. On Thursday, Gibraltar said the captain of the Iranian vessel was arrested for breaking EU sanctions on Syria.

Tehran has denied that the tanker was headed to Syria and called its seizure illegal because Iran isn't subject to a European oil embargo.

Iranian President Hassan Rouhani on Wednesday warned the U.K., according to Iran's Press TV. "You are the ones initiating insecurity, and will come to realize its consequences in the future," he said.

On Thursday, Gen. Ali Fadavi, a deputy Revolutionary Guards commander, said the U.K. and U.S. "will regret" detaining the ship carrying Iranian cargo, according to the semiofficial Fars news agency.

"If the enemies would have done the smallest calculation, they would not have taken such action," he said. He didn't comment on the U.K.'s allegations that Iranian vessels tried to block the British Heritage's passage.

One U.K. government official said London was in "de-escalation mode" in an effort to calm the situation.

The British Heritage had been on its way to pick up a cargo of oil from Basra port in southern Iraq when it changed course earlier this week, without loading, over fears it would be seized by Iranian forces following Tehran's threats. The tanker stopped off the coast of Saudi Arabia, and was located off the coast of Oman early Thursday morning, according to MarineTraffic.com.

After the three Iranian ships approached the British Heritage, the HMS Montrose trained its guns at the vessels and issued verbal warnings for them to back away, said the U.K. Defense Ministry. The three ships complied.

A ministry spokesman added that the British Heritage has since left the Persian Gulf.

Britain has maintained a naval presence in the region for years. The HMS Montrose has been in the Persian Gulf since late 2018. The U.K. currently has four minesweepers deployed there.

A Defense Ministry spokeswoman said she wouldn't comment on whether the government planned to increase its naval presence in the Gulf. BP declined to comment further on the event.

BP is a partner in the development of Iraq's Rumaila, the world's third-largest producing field, and it shipped around 50,000 barrels a day of Iraqi oil in 2018, via the Strait of Hormuz.

"We've just got to be really careful about our ships," BP Chief Executive Bob Dudley said at an event at London-based think tank Chatham House on Wednesday, in relation to Iran's threats.

The U.S. also has accused Iran of attacking tankers in the Gulf of Oman -- which Tehran denied -- and said Iran shot down a U.S. spy drone in the area. Tehran said the unmanned aerial vehicle was inside Iranian airspace when it was downed.

The U.K. has backed the U.S. assertion that Iran attacked the ships. But London has been at odds with the White House over its decision to pull out of the nuclear deal, and British officials are working with European nations on how to salvage the accord.

The attacks on tankers have roiled oil markets and increased the costs of transporting crude and other products in and out of the Persian Gulf.

The U.S. has worked in recent weeks on a plan for deterring attacks on tankers that calls for ships from Arab, Asian and other foreign nations to stand watch in the Persian Gulf and the Gulf of Oman while maritime patrol planes fly overhead.

Saudi Arabia and the U.A.E., which export a large amount of oil through the Strait of Hormuz, have backed such a plan.

"This idea has to be thought out," said Abdulkhaleq Abdulla, a political scientist and former professor in the U.A.E. "Gulf states would be happy to see this internationalization of Gulf security."

Military analysts say the threat is clear. The Revolutionary Guard Corps is equipped to swarm hostile vessels with fast boats armed with torpedoes and short-range missiles and small patrol craft equipped with machine guns and rocket launchers.

Military escorts in the region have a precedent. During the Iran-Iraq war in the 1980s, the two countries attacked each other's ships in the Gulf and Iran eventually began targeting foreign-flagged vessels. The assaults subsided when the U.S. escorted and reflagged foreign tankers under its ensign.

--Aresu Eqbali in Tehran and Sarah McFarlane in London contributed to this article.

Write to Rory Jones at rory.jones@wsj.com and Max Colchester at max.colchester@wsj.com

Stocks mentioned in the article
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