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Iran escalates tensions in the Persian Gulf after seizing UK tanker

The British tanker’s capture in the Strait of Hormuz is part of a tit-for-tat for the Royal Navy’s impounding of an Iranian vessel in Gibraltar

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In the latest escalation in the Persian Gulf region, Iran’s Islamic Revolutionary Guard reportedly captured a British-flagged oil tanker in the Strait of Hormuz on 19 July, the same day that the Gibraltar government renewed the detention of an Iranian supertanker seized by British Royal Marines earlier in July, under the suspicion that it was violating EU sanctions by carrying crude oil intended for Tehran’s staunch ally, the Syrian government.

“This is a quite obvious tit-for-tat and we have been warned in advance and for the British not to realise that is frankly is not paying attention,” Justin Urquhart-Stewart, founder of London’s Seven Investment Management, told New Europe on 20 July, adding that the British, through their allies, should have made sure there was proper military navy support for all shipping passing through that particularly sensitive area.

“Now most of the exports coming out of that area, of course, tend to head east rather than west so it has to have bigger impact on the likes of Japan and India and places like that. But overall this will put up the cost of security, cost of transport. We will no doubt see a spike in price if only because of the fear that this is adding to the rest on the concern of a broader issue in the Gulf,” Urquhart-Stewart said, adding, “What worried was the potential of American troops in Saudi Arabia in the next week or so. I think that’s again another way to ratchet up the level of nervousness that is going on. And, of course, add that to a very unpredictable American president,” he said while adding that he fears a American attack on facilities inside Iran or somewhere else in the world.

“The simple solution would be if the Iranians are willing to say the oil is not going to Syria and that it’s going elsewhere, which can then be proved and the tanker is released, then the quid pro quo could sorted out. However, the Iranians don’t want to be seen as losing face on this,” Urquhart-Stewart said. “The Iranians are not in a strong enough position to really try to push this further with the Americans. Their economy has been suffering greatly. What they do want to do is drive a wedge between Europe and America because Europe wants to keep the agreement going; America doesn’t. Stuck in the middle of the Atlantic is Britain, which doesn’t have a clue what it wants to do. After all, we don’t have proper leadership at the moment, let alone a policy,” the London-based expert said.

On 20 July, a spokesperson for the EU High Representative for Foreign Affairs Federica Mogherini, said the seizure of two ships by Iranian authorities in the Strait of Hormuz is of deep concern. “In an already tense situation, this development brings risks of further escalation and undermines ongoing work to find a way to resolve current tensions. We urge the immediate release of the remaining ship and its crew, and call for restraint to avoid further tensions. Freedom of navigation must be respected at all times,” Maja Kocijančič said.

Responding to the incident, UK Foreign Secretary Jeremy Hunt said the British government was extremely concerned by Iran’s actions in the Straits of Hormuz.

The Iranians would like to try and resolve it quite quickly, according to Urquhart-Stewart, because they would like to keep EU on their side if they could possible can.

“They (Tehran) can use the agreement to say, ‘We’re still participating. We’re still hoping. We’re not acting against it, and we’re not fully in breach.’ But equally and ultimately, Europe needs to stand behind the international waterways agreement and make a clear statement saying, ‘All such national ways should be respected and you cannot actually go around capturing people’s vessels irrespective if you have fishing boats on the way and things like that,’” he said, referring to Tehran’s allegations that the seizure of the British-flagged oil tanker was allegedly due to a collision with an Iranian fishing boat.

“The Iranians need to make sure there is a swift solution, the question is will they be willing to do it by saying, Yes, we will assure you that the shipment of oil isn’t going to Syria. It’s going somewhere else and escort us to where we’re selling it to.; That’s the easiest way out of this. But, of course, when you’re dealing with the Iranian government you’ve got to be careful: There’s the Iranian government and then the Revolutionary Guard, and these two things are not the same,” Urquhart-Stewart said.

Crude rose on 19 July after Iranian state media said the Iran Revolutionary Guard had captured the British-flagged oil tanker, but there was no oil price increase, something Urquhart-Stewart attributed to low demand.

“You are not going to see a spike. If there was a higher level of demand coming through and you saw a potential interruption of supply you would see a spike at the moment. However, if we did see some more dramatic action taken with a tanker, a sinking or an attack, or something like that, you then see the possibilities of a spike,” said Urquhart-Stewart, adding, “The global economy is showing signs of slowing down, especially China and India. Now is not actually the time to see a spike in the price unless there is a significant political change and it starts getting more aggressive.”

The Director General of the International Energy Agency Director Fatih Birol said on the day that the tanker was seized that the IEA does not expect oil prices to rise significantly because demand is slowing and there is a glut in global crude markets.

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Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

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