London — The US military has reiterated its pledge to protect oil tankers sailing through the Strait of Hormuz after Iran's president suggested shipments from the region could be disrupted in response to sanctions.
Crude futures had pushed higher after Rouhani hinted that neighboring crude exports could be blocked if Tehran was frozen out of the market by embargoes due to come into force in November.
In response to questions from S&P Global Platts about Rouhani's comments, Captain Bill Urban, spokesman for US Central Command, said on Wednesday that "freedom of navigation" in the region would be upheld.
"US Central Command partners with many nations to provide and promote security and stability in the region," Urban said. "Together, we stand ready to ensure the freedom of navigation and the free flow of commerce wherever international law allows."
Oil prices have failed to respond to pressure from President Donald Trump on Saudi Arabia to release its 2 million b/d of spare capacity to cool the market. Iran is at loggerheads with the kingdom, which it fears will breach the terms of the OPEC agreement reached last month with allies including Russia to maintain existing quotas by cutting over-compliance.
Meanwhile, geopolitical tensions in the region have flared in recent months with oil tankers in the Red Sea targeted by militants from Yemen and Houthi missiles launched at Saudi Arabia. In turn, Trump's sanctions against Iran could reduce the Islamic Republic's output by up to 1 million b/d within a year, according to some forecasts.
About a third of the world's seaborne crude flows on tankers through the Strait of Hormuz, a narrow shipping channel separating the Persian Gulf states from Iran. Tehran has previously threatened shipping passing through the Strait, which is regulated by the UN Convention on the Law of the Sea, which dates back to 1982.
Saudi Arabia, the world's largest exporter of crude, depends on access to Hormuz to maintain its shipments to world markets. The UAE's Port of Fujairah provides the only other route outside the waterway to load significant volumes from the region by bypassing Hormuz via a pipeline.
