Tanker attack highlights threat to shipping from international tensions
The recent attack on a product tanker off Oman shows how simmering political tensions in the Middle East are seriously disrupting commercial shipping across the region. The M/T Mercer Street was involved in a suspected drone attack in which two crew members, a Briton and Romanian, were killed.
The Israeli-managed vessel was in the northern Arabian Sea travelling between Dar es Salaam and Fujairah when it was attacked. The ship, which had no cargo onboard when it was hit, was subsequently escorted by a US naval vessel to a safe port. The incident is the latest in a series of tit-for-tat attacks on shipping in Middle Eastern waters in recent years seen by analysts as part of long-running geopolitical disputes involving Iran – who the US, UK and Israel have blamed for the attack on the M/T Mercer Street.
The hostilities are an ever-present concern to shipping firms whose vessels navigate the region. "We have seen tensions in the Strait of Hormuz, Gulf of Oman and Persian Gulf increase over the past 24 months,” says Julio Garay-Roa, Senior Kidnap and Ransom Underwriter at Hiscox London Market. “The latest incident shows how important it is for a vessel operator to have a robust crisis management plan in place that allows it to respond quickly.”
The threat to British shipping will hinge on the UK’s response to the killing of its citizen, says Control Risks, the specialist risk consultancy and Hiscox's exclusive crisis management partner.The UK government said that it will work with international partners on a “concerted response”. They will likely avoid tactics that would represent a clear escalation in hostilities, such as an attack on an Iranian vessel or airstrikes on Iranian infrastructure. Instead, they are likely to use other weapons, such as cyber warfare, to retaliate against Iranian military assets, such as drones.
The UK may not rule out any opportunity to detain an Iranian vessel found in breach of sanctions or international law, Control Risks adds, which could lead to a Iranian response aimed at British shipping.
"We have seen tensions in the Strait of Hormuz, Gulf of Oman and Persian Gulf increase over the past 24 months. The latest incident shows how important it is for a vessel operator to have a robust crisis management plan in place that allows it to respond quickly." Julio Garay-Roa, Senior Kidnap and Ransom Underwriter at Hiscox London Market.
Specially designed product to help victims
Hiscox has devised an innovative insurance product to lessen the impact on vessel owners and managers of a seizure or assault on their ship by a foreign government.
It developed Malicious Vessel Seizure (MVS), a crisis management product to help protect shipping companies from politically motivated attacks by foreign governments, in response to attempts by Iran to seize British-registered ships.In 2019, a British-flagged tanker was boarded by Iranian forces and diverted into Iranian waters, while other attempts were made to seize a British registered vessel in retaliation for an Iranian tanker boarded by British forces off Gibraltar.
MVS gives shipowners and charterers immediate access to Control Risks’ experts to help manage the many issues that arise from this type of incident. As well as meeting the Loss of Hire costs that ship owners or charterers would face, the product also provides the services of Control Risks, to support the shipowner or charterer, including government liaison and family support for the victims. A co-ordinated crisis management response from the beginning can help lessen the impact on the crew members’ families, as well as the ship owner and manager. "MVS can give vessel operators the confidence to continue to trade through these waters knowing that they are prepared to deal with a potential crisis” Garay-Roa adds. "MVS helps vessel owners and managers to deliver the duty of care they owe their crew, as well as going some way in protecting against the potential financial downside from such incidents.”