As tensions escalate in the Middle East, Iran has captured a container ship linked to Israel, leading to heightened volatility in shipping markets. Container trading firm Container xChange is predicting a rise in war risk premiums.
The capture of the Portugese-flagged MSC Aries on 13 April is believed to be in response to an Israeli raid on the Iranian consulate in Syria and has heightened concerns about the security of key trade routes and the stability of regional hubs such as Jebel Ali. As of today (15 April), Iran’s foreign ministry said the vessel was seized for “violating maritime laws”. MSC leases the vessel from Gortal Shipping, an affiliate of Zodiac Maritime, which is partly owned by Israeli businessman Eyal Ofer.
“Regardless of immediate outcomes, we anticipate heightened uncertainty in shipping markets,” said Christian Roeloffs, cofounder and CEO, Container xChange. “This comes at a time when tensions have already been simmering since the end of November, particularly in the Bab-al-Mandab strait and the Red Sea. Now, the Strait of Hormuz emerges as a new focal point, with significant implications for Dubai, specifically Jebel Ali, a core transshipment hub in the region.”
The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea, and is renowned as one of the world’s most strategically significant chokepoints, meaning any disruptions can have immediate implications for global shipping routes. Over the past months, Houthi attacks on vessels passing through the Red Sea have been increasing, causing container ship and ro-ro operators to reroute vessels to avoid danger, impacting journey times and significantly increasing costs.
Roeloffs added: “We anticipate freight rates may rise in response to the increased tension and uncertainty. Furthermore, while the possibility of diversions around the region exists, potentially hubs like Jebel Ali, we believe it’s unlikely given the hub’s importance in global shipping networks.”
Iran’s targeting of Israel-owned merchant shipping has been ongoing since February 2021 as part of a ‘grey zone’ conflict between the two countries.
Container xChange said it will continue to closely monitor the situation.
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