Two Tankers Catch Fire After Colliding Near Strait of Hormuz

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(Bloomberg) — Two giant ocean-going tankers collided and caught fire near the Strait of Hormuz energy chokepoint, rattling global oil and shipping markets that have been on high alert since Israel attacked Iran.

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The Front Eagle, an 1,100-foot (335-meter) supertanker known as a very large crude carrier, and a smaller vessel called the Adalynn, crashed into each other off the coast of the United Arab Emirates at 00:15 local time on Tuesday, Frontline Plc, owner of the first vessel said by email. The incident was “navigational” and “unrelated to the current regional conflict,” it said.

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Shipping through Hormuz is under intense scrutiny because the waterway is the conduit for millions of barrels of Middle East oil every day, and Iran has previously threatened to close it in times of conflict. There’s no sign of that so far, but traders are still watching carefully for any signs of disruption.

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Forward freight agreements — derivatives that traders use to bet on or hedge shipping costs — rallied on the news, according to two people who follow those prices. They were between 70 and 74 industry standard Worldscale points on Tuesday, up from between 65 and 70 points a day earlier. 

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The derivatives had slumped during Monday’s trading session after a report that Iran was seeking to de-escalate the conflict with Israel. 

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Israel’s airstrikes on Iran, which started Friday and have continued since, sparked a rally of close to 50% in oil tanker rates from the Middle East. 

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While there’s been no direct intervention from the Persian Gulf country, naval forces have warned of increased jamming of vessels’ electronics. Such activity pressures crews to step up visual lookouts and use more traditional systems like physical navigation maps, several owners said.

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UK-based maritime security agency Vanguard Tech said in an alert seen by Bloomberg that there was no initial indication of “foul play” regarding the collision, with fires contained and crews reported safe. 

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According to a social media post from UAE’s national guard, 24 crew members on the Adalynn were rescued. Frontline confirmed its crew was safe too.

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Still, news of the collision caught the attention of shippers and oil traders in morning trading in Asia and the Middle East as incidents of this kind in Hormuz are very rare. 

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Front Eagle appeared to have been affected by signal jamming on June 15 and 16 as it sailed past the Iranian port of Assaluyeh, according to ship-tracking data, although that wasn’t close to the crash site. The supertanker was headed to China, from Iraq’s Basra oil terminal, according to vessel tracking data compiled by Bloomberg.

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“At the time of writing, we can only confirm that it is not a security incident,” said Daniel Smith, an analyst at Ambrey, another security specialist, without providing further details. “We continue to investigate the cause.”