Update and Recommendations
29 Jul 2019
London United Kingdom
See What Exactly Happens
Following the Iranian detention of two tankers within the Strait of Hormuz, both tankers remain detained, indicating an inability to resolve the current diplomatic crisis. However, in a recent development on 26 Jul 19, the crew of the Panamanian-flagged tanker Riah were released. The nine crew members who were released are all believed to have been Indian citizens. The UK has continued to call for the full release of crews from both vessels. Iraq has made 3rd party representation to Iran on behalf of the UK in a bid to negotiate the release of the Stena Impero, this is believed to have been at the request of the UK.
These tensions have also occurred during a backdrop of strained Iranian-British relations. On 26 Jul 19, a British ruling stated that the UK does not have to pay £20 million GBP of interest on the in excess of £380 million GBP which the UK owes Iran, due to the cancelled sale of Chieftain tanks in the 1970s. Furthermore, with the ascendancy of the former British Foreign Secretary, Boris Johnson, to the position of Prime Minister, Tehran must now engage with a British leader who recently courted Iranian ire with his diplomatic gaffe surrounding the detention of Nazanin Zaghari-Ratcliffe by Iran.
In the strongest possible terms, Dryad advise against the deployment of any private security personnel, of all nationalities, onboard commercial vessels transiting the Strait of Hormuz.
The deployment of any such methods is highly likely to draw unnecessary attention towards a vessel and as such is likely to only heighten the risk profile to a vessel. Iran has a long and deep suspicion of what it perceives is the illicit deployment of overseas security personnel within its immediate area of interest. Currently the risks to commercial vessels within the Strait of Hormuz are exclusively linked to deteriorating US / UK and Iranian relations and at this time do not extend to the wider international shipping. As such should a vessel display an aggressive posture in the form deploying private security personnel it significantly increases the risks that Iran will seek to demonstrate its objection to the practice by detaining both vessel and crew. If a vessel is suspected of carrying security personnel and subsequently intercepted, Iran is highly likely to detain both the vessel and crew under the auspices of spying so as to prolong the case for legitimate detention and enhance associated diplomatic leveraging.
It is the recommendation of Dryad that all UK-flagged, managed or owned vessels should avoid transits of the Persian Gulf, unless a naval convoy can be guaranteed. Vessels must also consider that naval convoy is not a guaranteed failsafe against interception, as UK Naval vessels will not have authority for use of lethal force in the absence of immediate threat to life. As such, if boarded by IRGC(N), crews are advised to comply fully with all requests so long as they do not further endanger threat to life.
In the interests of business continuity, charterers and technical managers are advised to consider the chartering of non-UK connected vessels in the medium to long term. It is the assessment of Dryad that Chinese-flagged vessels currently represent the lowest risk of interruption within the Strait of Hormuz, and are highly unlikely to experience any form of disruption by way of detention. All UK vessel owners are advised to consider the practice of re-flagging or relocation of all UK interest vessels from the Persian Gulf when safe to do so, and to remain mindful of the limitations of naval protection.
Dryad continue to advise that all transits of the Strait of Hormuz undergo independent risk assessment so that commercial partners are fully appraised of the current risk profile arising from a dynamic and complex diplomatic situation.
The short term prognosis for diplomatic relations between the UK and Iran, and the wider security situation within the Strait of Hormuz, remains complex. With a new UK government recently installed, it is likely the new administration will be keen to put the issue ‘to bed’, or if not possible delay having to resolve the situation. However, with Brexit negotiations dominating the first 99 days of the Johnson administration, it is unlikely that Britain will have the adequate governmental and diplomatic time required to sufficiently lubricate the necessary levers of diplomacy which could ease tensions with Iran. Furthermore, as has already been noted the installing of Johnson as PM has the potential to deepen Iranian scepticism of British intent. It is not unlikely that Iran may perceive Britain as distracted in the short term, and without the naval means to fully secure its rhetoric on the international intent. This would realistically increase the likelihood that Iran will continue to implement what it sees as its strategic imperatives within what it perceives as its region of influence, especially within the Strait of Hormuz.
Iran has seen more positive developments in terms of its relations with European nations, and Iran is engaged with the EU regards both INSTEX and JCPOA. Europe has however continually raised the prospect of a British-led European naval mission being sent to the Gulf, and if this strategy materialises, it would likely destabilise any sense of diplomacy between the EU and Iran. Iran will also likely remain sceptical of the missions capacity, and will likely perceive it as in part an attempt on the behalf of the UK and EU to show they can work together despite the process of Brexit being underway. Iran has strongly opposed build-up of Naval forces and if deployed is highly likely to oppose them in some way. If deployed vessels from those countries will face an exponential increase in risk.
Finally, Iran continues to seek a competitive advantage with its regional opponent, Saudi Arabia. In light of the recent potential disruptions to shipping in the Strait of Hormuz, Saudi Arabia has increased its export capacity on its Red Sea coastline, and Aramco has facilitated an increase in export potential at the Yanbu South oil terminal. Whilst Saudi attempts to reroute supply seem eminently practical on the surface, they in fact play into Iran’s strategic advantage. Saudi vessels would have to transit the Bab-El-Mandeb Strait, a chokepoint as severe as the Strait of Hormuz. Furthermore, Iranian proxies the Houthis already operate within the strait, and have attacked Saudi vessels in the past. An increase of commercial shipping within the Bab-El-Mandeb would require the international community to spread their naval assets across two straits, not one, which would reduce the likelihood of Iranian activity being sufficiently policed.