A week is a long time in politics, Middle East edition
Whisper it, but in the long run, tentative diplomatic rapprochement between Trump and the ayatollahs could augur well for our industry
After the last few days of craziness, shipowners and marine insurers have earned their Friday evening after-work drink
THE adage that a week is a long time in politics is widely attributed to Harold Wilson. If those words did pass the former British prime minister’s lips, it was not with specific reference to the Middle East. But the past seven days in that region highlight the ongoing applicability of the maxim.
The things that have occurred since this time last Friday have been tumultuous for all sectors of our industry. That’s the posh term, anyway. Crazy would be the common parlance.
Tensions had already been ratcheted up by Israeli air strikes aimed at decapitating Iran’s incipient nuclear programme.
Asked whether the US would join the bombing campaign, Donald Trump was uncharacteristically coquettish, telling a press conference: “I may do it. I may not do it. Nobody knows what I’m going to do.”
By the early hours of Sunday morning, he had done it. Bunker buster bombs had fallen on Iran’s main enrichment facility at Fordow.
How far this escalation has gone towards achieving its ostensible objectives depends on whether you want to believe leaked intelligence reports, in which case the answer is not very far, or Trump’s subsequent insistence that Iran’s drive for the bomb has been set back by decades.
Shipowners and marine insurers returning to their desks last Monday were faced with the immense task of assessing the implications for the businesses. By and large, they kept their cool.
The possibility of Iran closing the Strait of Hormuz was widely discounted as sabre-rattling. Even so, it cannot have been any surprise that tanker spot rates for VLCCs and LR2s doubled.
Some industry heavy hitters, led by Frontline, publicly stated that they were not taking Hormuz fixtures until matters clarify.
Owners with greater risk appetite found the war risk premiums demanded by underwriters doubling to 0.5% or more of hull value. But that’s an overhead cost, and more than offset by the jump in charter income.
Chinese and Turkish tonnage seems to have benefited from their governments’ perceived neutrality. Some vessels with US, UK or Israel links could not secure cover at any price, Lloyd’s List was told.
By the time people knocked off for the day, the expectation was that a new equilibrium had been reached. Then a ceasefire was announced overnight.
Admittedly, ceasefire is always a relative term in the Middle East, and durability is hardly the default option. But by Wednesday, matters looked pretty much they way they did before the clashes between Tel Aviv and Tehran.