Unladen oil tanker Mercer Street attacked off Oman coast: operator

An unladen oil products tanker Mercer Street heading to Fujairah to load a diesel cargo was attacked off the coast of Oman late July 29, the ship's operator Zodiac Maritime confirmed a day later.

The incident comes amid a heightened period of risk to shipping in the region after a series of incidents targeting oil tankers and ships dating back to 2018.

"We can confirm there has been a suspected piracy incident onboard the product tanker Mercer Street," Zodiac said in a statement. "At the time of the incident, the vessel was in the northern Indian Ocean traveling from Dar es Salaam to Fujairah with no cargo on board."

Mercer Street -- which has a deadweight of 49,992 mt, was traveling from Dar es Salaam in Tanzania en route to Fujairah in the UAE -- to load a diesel cargo, according to data from S&P Global Platts trade flow tool cFlow.

UK Maritime Trade Operations (UKMTO), which monitors maritime security in the region, also said in an update that the tanker had been attacked off the coast of Oman on July 29.

Zodiac, which is an Israeli-owned firm, said it is liaising with the UK MTO and other relevant authorities. It also said that two crew members -- a Romanian national and a UK national -- died as a result of the incident.

Higher freight

The ship was due to load diesel over the coming weekend in Fujairah for delivery into East Africa at 130 Worldscale points for a trading company, which has now placed another ship on subjects at a sharply higher rate w155 for loading early next week.

It could not be immediately confirmed if the latest deal is replacement for exactly the same cargo, but market participants said that the incident has imparted fresh bullishness into the clean tankers market.

The attack comes at a time when rates on the Persian Gulf-East Africa route are already on the rise.

S&P Global Platts July 30 assessed the route 7.5 Worldscale points higher at w147.5 amid hectic chartering activity and strong demand to move distillate cargoes into Africa.

"There are already 15 cargoes seeking MR ships for loading early next month in the Persian Gulf," said a broker in Copenhagen. "The latest incident is an icing on the cake for owners seeking higher freight," the broker said.

Immediately after the incident, owners are also seeking higher rates for naphtha loading on MRs on the Persian Gulf-North Asia and West Coast India-North Asia routes.

Owners are now seeking rates above w100 on the PG-Japan route, said a source with one among them. The route was July 28 assessed by Platts at w95.

The attack on the Mercer Street has taken place in an area which is already subject to war risk premia and such incident reinforce the need for the levy to continue and rates charged may even move higher, a maritime insurance executive said.

Attacks persist

The incident also follows a spate of attacks and attempted strikes on Saudi Aramco's infrastructure by the Houthis in Yemen.

On July 27, Saudi forces intercepted an attack on the Red Sea city of Jazan, which Yemen's Houthi militants targeted with ballistic missiles and booby-trapped drones. The location is home to the 400,000 b/d Jazan refinery project, which is in the process of ramping up. It is expected to reach full production by mid-2022. It had previously been expected to be fully operational at the end of 2019 but has suffered delays.

In a similar incident, Lori, an Israeli-owned container ship, was attacked in the Arabian Sea on March 25.

In May 2019, two oil tankers were attacked in the Gulf of Oman, off the coast of the eastern UAE port of Fujairah. The US blamed these attacks on Iran, which denied responsibility. Tensions remain high between the two countries, despite reported progress towards talks that could see the US rejoin the Iranian nuclear deal and offer sanctions relief to Iran's oil sector.