Attacks on Gulf shipping leave world economy vulnerable

Recently, an oil tanker traveling through the Gulf of Oman was struck by a suspected kamikaze drone, killing two crew members. And yesterday, several vessels traveling through the nearby Strait of

Hormuz reported sudden emergencies, while another was boarded by operatives suspected of being Iranian troops. A terrible situation for all affected, to be sure. But the rest of us should be concerned too.

Global shipping is extraordinarily efficient, managing to transport 80 percent of global trade so reliably that consumers take it for granted. As the Mercer Street vessel’s misfortune demonstrates, though, shipping is also highly vulnerable to disruptions. And increased maritime aggression stands to harm ordinary consumers as well.

The U.S., U.K. and Israeli governments all blame Iran for the Gulf of Oman attack, saying they are certain of the country’s guilt regarding events on the Liberian-flagged vessel, which is owned by a Japanese firm and managed by a U.K. company belonging to Israeli billionaire Eyal Ofer. Iran has denied striking the Mercer Street and no footage of the incident has been released, but most shipping analysts suspect the country as well.

Yesterday, another tanker, the Panama-flagged Asphalt Princess, was reported to have been boarded by armed men, thought to be Iranian operatives, in the Strait of Hormuz, while other cargo ships also reported sudden steering problems.

“This is a shadow conflict between Iran and Israel, where shipping has been caught in the middle,” said Cormac McGarry, a maritime analyst with the global risk consultancy Control Risks, referring to the Mercer Street.

“You can attack a Japanese-owned, Liberian-flagged vessel simply because it’s linked to an Israeli billionaire. It’s a very useful way of launching deniable attacks that don’t directly target your adversary,” he added.

Indeed, the alleged attack on the Mercer Street and these suspected new attacks are only the latest incidents involving cargo ships traveling through the Gulf of Oman and its twin, the Strait of Hormuz.

The Gulf of Oman and the Strait of Hormuz, through which vast quantities of oil and other essential goods travel, form a vital artery of the globalized economy, with several dozen cargo vessels owned by a range of companies, many in Western countries, and carrying flags ranging from the Philippines and Liberia traversing its waters at any given time.

As the shadow wars between Iran and Israel and Iran and Saudi Arabia intensify, those commercial vessels — without whose cargo, companies around the world would have to cease operations — face the risk of being harmed simply because of their affiliation with a particular country.

In the past couple of years, Israel is thought to have used mines to attack several Iranian tankers transporting oil to Syria, while a range of attacks thought to have been perpetrated by Iran have targeted ships linked to Israel.

“Lots of things happen in the Gulf of Oman,” said Simon Lockwood, a maritime expert with the global insurance broker Willis Towers Watson. “This is the fourth incident in a short time involving an Israel-affiliated vessel.”

For example, two years ago, the Stena Impero was thought to have been seized by Iran’s Revolutionary Guards not because of any serious maritime infractions but as an apparent proxy for the U.K., which itself had seized an Iranian tanker suspected of breaching EU sanctions on Syria a short time earlier.

Ships are set up to transport goods and, these days, also rudimentarily defend themselves against pirates — which is why the Mercer Street had a security guard on board. However, they’re not set up to defend themselves against hostile-state attacks.

“If Iran wanted to cause serious supply chain disruptions, it could escalate these attacks in the Strait of Hormuz,” McGarry said. Such disruption would make this May’s Colonial Pipeline misery and even the 1973 OPEC oil embargo feel like a surmountable inconvenience.

Earlier this summer, a COVID-19 outbreak at the Chinese port of Yantian also demonstrated just how vulnerable globalized commerce is to shipping disruptions. In May, when a new wave of infections began spreading at the port — the world’s third-busiest —managers had to slash operations. And with Yantian handling over 13 million containers’ worth of goods traveling in and out of China each year, the partial closure caused a massive backlog. So massive, in fact, that global retailers now fear the Christmas season may be lost.

The fact that an outbreak at a Chinese port could bring Christmas shopping to a screeching halt should worry everyone involved in the globalized economy — meaning every one of us. It also highlights the risks associated with Israel and Iran’s potential proxy war involving cargo vessels. “If less cargo is moving and taking longer, that hits consumers in the pocket,” Lockwood noted. “And confidence in shipping declines.”

Most of us may not be closely following Iran and Israel’s long-standing enmity, but we care about the convenience of our daily lives. And that may now involve paying attention to the traffic through the Strait of Hormuz.

The writer is a resident fellow at the American Enterprise Institute.