Singapore ships attacked in Strait of Hormuz, but some traffic continues

Two Singapore-flagged container ships, GFS Pride and GFS Giselle, were attacked in the Strait of Hormuz this week. GFS Pride was hit by a projectile, caught fire and sank, while GFS Giselle was damaged. Crew members on both vessels were reported safe.

Despite the attacks, maritime analysts say commercial shipping through the strait is unlikely to stop entirely. Strong demand for Middle Eastern energy, especially from Asia, and commercial opportunities are keeping some operators willing to accept higher risks and costs. Collin Koh, a senior fellow at Singapore's S. Rajaratnam School of International Studies, said he did not see Singapore-flagged ships or Singapore shipping companies necessarily avoiding a transit if an opportunity arose.

Crossings fall

Kpler data show 131 crossings through the Strait of Hormuz in the week ended Oct. 14, down from 176 the week before, according to the maritime analytics firm. The decline cannot be attributed solely to the latest incidents. Dimitris Ampatzidis, Kpler's maritime risk and compliance manager, said the attacks showed Iran still has the ability to threaten commercial vessels, with risks reaching beyond oil and gas transport. Further attacks could deter more operators, he said, with the effect likely to vary by vessel type and each company's risk assessment.

While some operators are still willing to transit Hormuz, much of the global container shipping industry has already adjusted networks to avoid the strait. Jayendu Krishna, a director at Drewry Maritime Advisors, said no major container shipping line has resumed services through Hormuz since suspending operations after the war broke out in February. Only some regional operators have continued sporadic services, generally using smaller feeder vessels. That means the immediate impact of the latest attacks on container shipping could be limited, he said.

Krishna warned that a further escalation into the Gulf of Oman could pose a more serious threat to regional supply chains, particularly if it disrupts alternative ports such as Khorfakkan in the United Arab Emirates and Oman's Sohar. He described those ports as critical gateways and a lifeline for cargo entering Gulf countries.

Commercial incentives

Singapore Foreign Minister Vivian Balakrishnan offered an example of how higher oil prices can make Hormuz voyages commercially worthwhile. Speaking at the Milken Institute Asia Summit last week, Balakrishnan recounted a conversation with an unnamed Gulf counterpart who said his country was earning more from oil exports than before the war by operating a so-called "Hormuz shuttle" involving about 20 very large crude carriers. The vessels were effectively self-insured against attacks, according to the official's account, with higher crude prices making the voyages financially worthwhile despite the risks. "Sometimes you get hits, but it is still worthwhile to run the 'Hormuz shuttle,'" Balakrishnan quoted the official as saying.

The Singapore Shipping Association said it did not expect a broad withdrawal of commercial shipping from the region. Its president, TS Teo, said the developments were more likely to result in adjustments to trading patterns as markets adjust to changes in supply and demand for goods and energy. He said shipowners would keep balancing commercial factors, security conditions and crew safety.

Source: CNBC Top News.