Indian Oil Refiners Adopt Precautionary Measures Over Iran's Strait of Hormuz Blacklist Threats

Indian Oil Refiners Take Precautions Amid Escalating Security Risks in the Strait of Hormuz

In the wake of Iran's recent announcement of a blacklist containing 45 ships, Indian oil refiners and a global energy major are reassessing their shipping arrangements to avoid vessels that have been deemed non-compliant by Tehran. The move comes as Iran intensifies its security measures in the Strait of Hormuz, a critical waterway for global energy supplies.

The Indian refiners, which include at least three major players, have decided to stop using vessels on Iran's blacklist, including those involved in ship-to-ship transfers. This decision is driven by concerns over security risks, particularly in light of Iran's threats to penalize vessels that conduct STS transfers with blacklisted tankers.

Iran's blacklist, which was announced on Sunday, targets ships that have allegedly broken its rules for crossing the Strait of Hormuz. The Persian Gulf Strait Authority, a new body set up by Iran to manage the strait, has warned that vessels on the blacklist could face fines, detention, and cargo confiscation.

The Impact on Shuttle Runs and STS Transfers

The Indian refiners' decision to avoid vessels on Iran's blacklist is likely to have a significant impact on the shuttle runs that have kept oil flows from the West Asia alive despite Iran's clampdown on shipping through the strait. These shuttle runs involve dedicated tankers that move oil from the Gulf through Hormuz for unloading through STS transfers in the Gulf of Oman onto ships to end-users.

Several charterers and shipping firms are currently evaluating Iran's warning and discussing internally whether to continue their STS operations. Some are considering alternative tonnage, counterparties, or transfer locations, while others are opting for a safer approach by buying oil on a delivered basis shipped to a final destination instead of free-on-board at STS locations in the Gulf of Oman.

Global Energy Majors Weigh Options

The decision by Indian refiners to avoid vessels on Iran's blacklist is not an isolated incident. Global energy majors, including Saudi Aramco and Abu Dhabi National Oil Co (ADNOC), are also reassessing their shipping arrangements. Some of the tankers on the blacklist are owned or chartered by these companies, and they have been used for shuttling crude, refined products, and liquefied natural gas (LNG) out of the Gulf for STS transfer off Fujairah in the UAE or Sohar, Oman.

Industry Experts Weigh In

Ana Subasic, a trade risk analyst at shiptracking firm Kpler, notes that the most compliance-sensitive buyers are expected to avoid vessels on Iran's blacklist moving forward. However, she also believes that the trade is more likely to reroute through alternative tonnage, counterparties, or transfer locations than disappear altogether.

Key Takeaways

• Indian oil refiners and a global energy major are avoiding vessels on Iran's blacklist due to security concerns.
• The decision is likely to impact shuttle runs and STS transfers, which have kept oil flows from the West Asia alive despite Iran's clampdown on shipping through the strait.
• Global energy majors, including Saudi Aramco and ADNOC, are reassessing their shipping arrangements in response to Iran's blacklist.
• Industry experts believe that the trade is more likely to reroute through alternative tonnage, counterparties, or transfer locations than disappear altogether.
• The key issue is contagion, with Iran's threats potentially narrowing the pool of willing shipowners, charterers, and buyers, particularly among firms with material Gulf exposure.