Two Ships Sink Near Hormuz Strait Amid Rising Trade Risks

Two commercial vessels have sunk and a third was damaged in the Strait of Hormuz region due to a series of attacks, highlighting the continued dangers to this vital shipping lane. The container ship GFS Pride, sailing under a Singaporean flag, caught fire and sank on Tuesday after being struck by unidentified objects. Its 21 crew members were rescued unharmed. Separately, the cargo ship Cape Dao, which had been attacked in September resulting in one crew fatality, was also reported sunk this week. Another vessel, the GFS Giselle, sustained damage but managed to reach safety.

These incidents occur as the United States seeks to increase oil shipments through the strait, following months of disruptions. For shipping companies and traders, the primary concern has shifted to the escalating costs associated with navigating the Hormuz. The daily charter rate for a supertanker transporting oil from the Persian Gulf to China has surged to nearly $1 million, a significant jump from approximately $230,000 before the recent conflict.

The Maritime and Port Authority of Singapore confirmed the GFS Pride was hit on October 13, caught fire, and sank after its crew was evacuated. The GFS Giselle was damaged the following day, though its 22 crew members were unharmed. The Cape Dao, flagged in Antigua and Barbuda, sank this week following an earlier attack on September 23. While these are separate events, they contribute to a sharp increase in attacks on commercial vessels in the area.

Iran's Revolutionary Guard claimed a container ship sank after hitting a naval mine in an unauthorized channel, though they did not name the vessel, and it remains unclear if it was the GFS Pride. Singaporean authorities reported damage from unidentified objects, leaving the exact cause of the GFS Pride's sinking uncertain. The escalation is not limited to oil tankers, with container and dry bulk cargo ships also being targeted recently. Analysts noted approximately 24 vessels were hit in the two weeks leading up to October 11, marking one of the most severe waves of attacks since February.

Control over maritime traffic is seen as a tactic by Iran to influence the United States, which is attempting to maintain commercial tanker passage while Iran seeks to prevent a return to normalcy. Both sides recognize the impact of the struggle over Hormuz on global energy prices. Before the conflict, about one-fifth of the world's oil and LNG trade passed through the strait. While some trade has been rerouted, the recent attacks have revived fears of further disruptions.

The economic impact extends beyond oil prices, with increased insurance costs for war risks, the need for crews willing to sail in dangerous waters, and higher charter rates due to vessel shortages. The cost to charter a supertanker on the Persian Gulf to China route has more than quadrupled since before the war. Used tankers are also fetching record prices. These developments, coupled with rising oil prices, are expected to affect refineries, industries, and consumers, particularly in energy-importing nations like Japan and South Korea, and potentially Israel.