More tankers come under attack as conflict in Iran spreads in the region

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More tankers came under attack in Gulf waters on March 5 as the war between US, Israel and Iran escalated, and Iranian drones entered Azerbaijan, threatening to spread the crisis to more oil producers in the region.

A Bahamas-flagged crude oil tanker was targeted by an Iranian remote-controlled boat laden with explosives while anchored near Iraq’s Khor al Zubair port, according to initial assessments. A second tanker at anchor off Kuwait was taking on water and spilling oil after a large explosion on its port side.

Nine vessels have come under attack since the conflict broke out between the US, Israel and Iran on Feb 28. Iran launched a wave of missiles at Israel early on March 5 and also sent drones into Azerbaijan, injuring four people.

The escalation comes after a motion to halt the US attacks was blocked in Washington and as the son of Iran’s slain supreme leader emerged as a front runner to succeed him, suggesting Tehran was not about to buckle under the pressure.

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

Hundreds of other vessels remained outside the Strait of 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.

US President Donald Trump offered US navy escorts and insurance in a bid to restart shipping flows and curtail energy prices. Insurance market Lloyd’s of London said on March 5 it is engaging with the US government on a plan.

BP evacuated foreign staff from Iraq’s Rumaila oil field after two unidentified drones landed inside the field, according to Iraqi oil sources. Baghdad has cut its oil production by nearly 1.5 million barrels a day as the country ran out of storage and was unable to load tankers, officials told Reuters.

A refinery in Kuwait shut down and another reduced its processing rate. A third refinery in Bahrain also cut its output.

Oil prices jump again

Oil prices extended their rally on March 5, climbing around 2 per cent. They have risen 15 per cent since the war started on Feb 28, as US-Israeli strikes on Iran disrupted Middle East supplies.

A benchmark European gas price also gained 2 per cent on March 5. It has surged around 50 per cent this week so far.

Russia’s President Vladimir Putin said that Russia could halt gas supplies to Europe right now, amid the spike in energy prices from the Iran crisis.

Qatar, which provides 20 per cent of the world’s LNG supply, halted gas production earlier this week due to the conflict. Other major producers such as the US and Australia have little spare capacity to offset this lost supply, according to Reuters calculations and industry analysts.

The EU’s task of refilling its gas storage in the coming months has become riskier and more expensive due to the Iran conflict and disrupted LNG supplies. It still imports some gas from Russia, planning to end pipeline supply by late 2027 and ban new short-term LNG contracts from late April 2026.

Asian importers came under further pressure from the disruptions in supply from the Middle East. China asked refiners not to sign new contracts to export fuel and to try to cancel shipments already committed, several people with knowledge of the matter said on March 5. REUTERS