Obviously, it is one of the best planned wars in human history, with a clearly defined military/political outcome and a wonderfully executed naval strategy, which resulted in a resounding Persian defeat at the hands of a determined western coalition.
But enough of the Greek victory over the Achaemenid Empire under King Xerxes at the Battle of Salamis in 480 BC, one of the most decisive maritime battles in human history.
Instead, today, we face a complex and dynamic military situation in the Arabian Gulf, which is already causing unexpected consequences, as the war enters its fourth week and oil prices remain stubbornly over US$100 a barrel. Attacks by the Iranians on ships in the Gulf have continued and mostly only Iranian-linked vessels have been able to exit the Strait of Hormuz, closely hugging the northern shores in Iranian waters.
Insurance for international vessel wishing to make the transit is prohibitively high, despite the gung-ho enthusiasm shown by certain Greek owners earlier in the month to put the lives of crew at risk.
War risk cover has risen sharply for all vessels in the Gulf as more than a dozen seafarers have been killed in over twenty Iranian strikes on merchant vessels. Crews are also eligible for war risk bonuses, but it remains to be seen how enthusiastically they will be paid. If you have any insight into ship owners who are resisting war risk payments, vessels cut off from supplies or crew unable to leave the war zone, please drop us a line to the editor on email editor@bairdmaritime.com.
So far, the US Navy has not been able to provide an escort for tankers and other vessels, preferring to appeal for assistance from allies, who have largely demurred or claimed that the line was broken and they could not hear the request properly.
Satirists joked that President Donald Trump was reportedly upset that Japanese Premier Sanae Takaichi refused to send the fictional monster lizard Godzilla to protect convoys of LNG carriers from attack. In today’s world, the boundaries of truth, satire and tragedy are increasingly blurred, unfortunately.
Meanwhile on March 12, USS Gerald R. Ford, the US Navy’s newest and largest aircraft carrier, experienced a serious fire that began in her laundry rooms and took 30 hours to contain, requiring the ship to withdraw from the Red Sea and move to the Mediterranean for emergency repairs, whilst five hundred crew had to sleep in the mess room and corridors (not the kind of situation featured in Top Gun).
Remember, folks: always clean the lint filter on dryers on board, never overload sockets on a ship, and never override the safety systems on GE or Electrolux equipment. How many IMCA safety flashes and other fires have there been on these issues?
High oil prices are generally beneficial to the owners of offshore support vessels and offshore drilling rigs, as anyone old enough remembers the ramp up to US$147 oil in July 2008, when anyone who owned a rig or modern supply vessel was in the money and made out like bandits, at least until the cruel winds of the Global Financial Crisis blew in and collapsed the price later in 2008.
This time, there may be a dichotomy between those with assets currently trapped in the Arabian Gulf, facing an uncertain future until the shooting stops, and those whose rigs and boats are outside the region benefitting from frantic efforts at fossil fuel supply diversification by consuming nations in Asia and Europe.
No surprise that last week saw Italian state oil company Eni fast track development and approval for both the Geng North and Gendalo-Gendang gas projects, located offshore in the Kutei Basin in Indonesia's East Kalimantan province, within the Makassar Strait. The full Eni press release is here.
Gendalo-Gendang has been awaiting approval for a quarter century now, as the previous operator Chevron argued with the authorities in Jakarta on the economic viability of the project.
Today, with Indonesia potentially short of fuel, like Australia, leaving oil and gas in the ground seems a luxury the government in Jakarta cannot afford.
Saudi Arabia has reportedly begun shutting down some of its offshore oil fields and reducing oil production in response to the crisis plaguing the Strait of Hormuz, where activity is largely disrupted after the US and Israel launched attacks on Iran.
Saudi Arabia, the UAE and Qatar are all reeling from persistent drones and missiles attacks by Iran, which hit refineries, storage tanks and offshore production facilities as well as airports and even hotels.
When Israel attacked onshore infrastructure associated with Iran's South Pars offshore gas field last week, Tehran immediately retaliated by attacking Qatar's onshore gas processing facilities at Ras Laffan Industrial City, where over 110,000 people, mostly foreigners, work.
This weekend, President Trump issued an ultimatum to Iran to open the Strait of Hormuz, or America would bomb its power stations within 48 hours, an attack on civilian infrastructure which President Putin of Russia has used repeatedly and unsuccessfully to try to freeze Ukraine into submission over several winters.
We will not get into the ethics or legality of this ultimatum, but threatening to kill dozens of innocent civilian electricity company staff, and cutting off power to hospitals and schools, does not smack of “winning”.
Iran has vowed that it will continue with attacks on its neighbours' oil and gas facilities if America and Israel do hit its power stations, a nightmare scenario for the Gulf countries, for whom up to 70 per cent of government revenue comes from hydrocarbon sales and associated chemicals and fertiliser exports.
On Friday, reports surfaced that state oil company Saudi Aramco had closed the Marjan, Abu Safa, Safaniya, and Zuluf oil fields, suspending around two to 2.5 million barrels of oil production per day. The decision follows the Iranian attacks on shipping in the Strait of Hormuz, which have led to the suspension of exports by sea from the kingdom. Tankers sit fully loaded at anchorage unable to proceed on their voyages.
More than three weeks into the conflict, storage tanks around the Gulf are full and some rigs and platforms have also come under fire, including the jackup Arabia III, which was allegedly stood down from service off Saudi Arabia when a nearby platform was hit by drone debris. Thankfully, all crew onboard were safely evacuated, and Borr reported on March 9 that its three other rigs in the region, two in Qatar and one in the UAE, remained on contract but are also suspended.
Saudi Arabia has been the world’s largest oil exporter, usually selling around seven million barrels a day to world markets, mostly to Asia, before the war began. Now, those export levels are probably halved.
Saudi Aramco has tried to reroute exports via land pipelines across the Arabian peninsula from the Gulf to the Red Sea port of Yanbu, but tankers taking the oil from Yanbu are subject to threats from Iran’s Houthi allies at the mouth of the Red Sea, whilst the northerly export route via the Suez Canal cannot handle fully laden very large crude carriers with two million barrels of oil aboard, being limited only to accommodating one-million-barrel capacity Suezmax ships, as the name implies.
So far the Houthis have not moved against commercial vessels in this conflict, but they did so previously in 2023 and 2024, seizing the car carrier Galaxy Leader, holding its crew hostage and sinking several bulk carriers.
Qatar’s LNG processing facilities at Ras Laffan were also hit and extensively damaged by Iranian inbound fire last week. On March 2, QatarEnegy had already shut in all LNG production and suspended the operation of all the QatarEnergy platforms feeding the gas facilities.
Qatar operates 14 LNG trains and many of them are operated as joint ventures with ExxonMobil, Total and Shell. Shell's wholly owned Pearl gas to liquids plant was also damaged.
Even if the plants had not been damaged by the attacks, Qatar lacks the capacity to store LNG in-country for a protracted period. In an update on Thursday, Upstream highlighted that QatarEnergy reported that 17 per cent of the country’s LNG export capacity had been impacted, which would likely take up to five years to repair and cost the country up to 20 per cent of its export revenues. Chief Executive Saad Sherida Al-Kaabi warned that Qatar would have to declare force majeure on its LNG exports under some long-term contracts due to the attacks.
Borr has stated that its four rigs in the Gulf are suspended, but still on contract. What does this mean, though? Borr has been deliberately vague here.
Are the rigs on contract, but suspended for force majeure at zero rate, as well as operationally suspended? Is Borr receiving any charter hire for the quartet of stranded jackups? I have not seen anything to clarify from any rig or vessel owner in the Gulf.
Valaris has seven jackups bareboated to its fifty per cent joint venture rig company, ARO, where the shareholder is Aramco itself. ARO also owns another nine rigs in its own right. Valaris is usually very open in its investor relations but nothing has been issued now since the fleet status report of February 17.
With the Eid holidays kicking off last Friday, we are unlikely to get any new news today either on whether full hire is being paid or whether contracts have been suspended, or terminated.
All Middle Eastern state-owned oil companies have the right to suspend at reduced or zero day rates and to terminate for their convenience, as contractors discovered during Covid and jackup owners again in 2024, when Saudi Aramco suspended over thirty jackup contracts on a zero rate for up to a year after its target oil production goal changed.
Aramco and ADNOC will always put their corporate and national self interest ahead of individual companies, especially foreign companies, even if those contractors and subcontractors face millions of dollars of costs for vessels that are not working and are not paid, under suspended or terminated contracts.
This hire status is critical, as there are around 138 jackups working in the Arabian Gulf as per Esgian, with another seven rigs working in Egypt, Israel and Libya. This is over a third of the entire global jack-up fleet.
The majority of the working rigs in the Gulf are working for Saudi Aramco, over seventy, with another forty in UAE with state oil company ADNOC and the rest scattered across Kuwait, Oman and the other emirates. Saudi Aramco charters twice as many jackups as work in the whole of West Africa or the Gulf of Mexico, and more rigs than are employed in all categories in the whole of Southeast Asia , South America, or the North Sea and Mediterranean.
Over five hundred offshore support vessels service these Gulf rigs and the associated construction projects and offshore platforms.
The most exposed owner is Rawabi with its fleet of around 200 offshore support vessels of various types, at least twenty of which were already laid up before the crisis. Rawabi also has a strong newbuild programme, but any new deliveries will be unable to transit the Strait of Hormuz to go on-hire with Aramco, which could be “problematic”. The company was already facing financial pressures from its huge fleet expansion, high levels of debt, and a large number of loss-making or low return contracts.
The Italian buyers of the construction vessel Siem Day now renamed NG Supporter face the same problem, as the ship cannot enter the Gulf to start its long term diving contract for Saipem for end user Aramco. The ship, which was purchased for US$112 million last month, has now rerouted to Sri Lanka to stand by, threatening a financial crunch for the owners as they seek alternative work.
State-owned Milala in Qatar and ADNOC Logistics and Services in the UAE can rely on their parent companies to protect them from disaster. Likely, DP World (former P&O Logistics) would also be protected from insolvency by its shareholder, the Government of Dubai, although the government faces ruin if the war continues for months as its aviation and tourist industries are shot until at least September now, as hotel occupancy hits lows not seen since Covid.
But other private companies are not so lucky. Britoil, Maridive, Astro, and Stanford Marine are all heavily to the Gulf market and at risk if the oil companies choose to suspend contracts or terminate them. On the offshore construction side, McDermott, Saipem, Subsea 7, and Larsen and Toubro are also vulnerable to contracts being suspended.
Every boat and rig owner in the Gulf is tight lipped on what is happening and what they expect to happen, unsurprisingly in the awful conditions of this war with every day bringing new developments.
In theory, both Saudi Arabian state-owned ADES, the world's largest owner of jackup rigs in the world following its takeover of Shelf Drilling last year, and ADNOC Drilling, the dominant rig owner in Abu Dhabi, are publicly listed on their local stock markets. Therefore, any material public information should probably have been disclosed about whether their parent companies/parent governments are continuing to pay charter hire and what “suspension” means.
ADES simply stated that its rigs and personnel were safe on its website on March 3.
Neither has published an update on what is happening commercially.
The one company we can expect to make an announcement when there are developments is Tidewater, the largest supply vessel operator in the world, and the only one publicly listed in New York.
Back in 2023, we highlighted that, “when you think of Tidewater's Gulf operations, think of a fifth of the company's fleet as locked into an abusive relationship with a cruel and powerful Arab sheikh who has metaphorically chained the company (and its competitors) to a drainpipe in a dark, dank, and very unprofitable basement.”
Today, Tidewater has 45 vessels, a quarter of its anchor handling and platform supply fleet, trapped in the Gulf as per its March investor presentation. Cheerleaders for the company will say that only the lowest specification ships are in the Gulf and that the boost in day rates for the bigger, higher value vessels outside region as demand hots up in response to US$100 oil prices, will more than compensate Tidewater.
I totally agree with this in the medium term and if the conflict is protracted, Tidewater's day rates outside the region will see powerful upside for the company. However, if contracts are suspended or cancelled in the Gulf, the April to June quarter could be very ugly, as offhire costs, offhire fuel consumption and higher war risks insurance expose the company to around US$24 million of cost in the Gulf (my own estimate based on some vessel lay up savings and some mitigation) which Aramco and the customers may or may not support.
I have previously said that one should watch Tidewater management's stock trading as when the company's leadership buy shares, this has historically been a very positive sign, with the executive team buying last year in the low forties. We had highlighted that share sales in February worth close to US$2 million by the company's general counsel might be a red flag.
Last Friday, four senior managers in Tidewater returned to purchase the company' shares at US$75 each, including both the aforementioned general counsel and the company's CEO, Quintin Kneen. This came after the company's director and largest private shareholder, Robert Robotti, gifted 10,000 shares worth over US$750,000 to unnamed parties on February 17, leaving him with beneficial control over 2,229,739 Tidewater shares worth over US$160 million.
What would one have to do to get a gift like that? Asking for a friend.
Mr Robotti's generosity was quickly followed by Tidewater management rushing to buy more shares in the US$4 billion company. The purchases were impressive and are summarised in this table as per SEC disclosures:
These figures exclude the value of any stock options held. These are purely the market value of the shares held by the four senior managers and the sums bought on March 20.
There are two ways to look at this. Either Tidewater management expects the shares to soar in line with the oil price and is buying in on the cheap, as they did in 2025 when the shares were cheap compared to today. Historically, the Tidewater management has rarely lost money on their trades, selling when the stock was above US$100 and buying when it was lower.
However, perhaps the management expects bad news ahead and wants to be seen to be investing their own money in the company as a show of solidarity. This is a problem known as Goodhart's Law, which states that when a measure becomes a target, it ceases to be a good measure. This principle highlights the paradox of relying on specific metrics like stock purchases by the CEO, as once a metric is identified as a primary indicator of success, its reliability can be compromised.
Speculating in something as volatile and unpredictable as a horrible combat situation is hard. Wars often take paths few foresee.
Nobody expected Donald Trump to waive the Jones Act for sixty days, an unprecedented act in a century. Nobody expected Trump to attack Iran and then temporarily remove the sanctions on Iranian oil at sea in transit so that Iran could sell it in the global markets at super high prices. The decision to lift sanctions on Russian oil at sea was probably more predictable, given Trump's efforts to create better relations with Russia and his evident respect for Vladimir Putin.
However, as we said before, “There are decades where nothing happens; and there are weeks where decades happen.”
Unfortunately, nobody knows where the current crisis is going to lead, but we will keep you posted on the marine aspects.
Background reading
After our column last week on burly thugs employed on dark fleet tankers, when we saw the footage of the press conference where the crew of the Russian LNG carrier Arctic Metagaz were greeted by the regional governor, we could not resist playing the game of “which are the two military security agents on board?”
It is wonderful that all the crew survived the attack by Ukrainian drones that left the vessel drifting and abandoned in the Mediterranean Sea with two of its cargo tanks ripped apart by explosions.
Click the link below to the link and see if you can guess who was the security:
Andrey Chibis met with the crew of the Russian gas carrier "Arctic Metagas" - News of Murmansk and the region - GTRK "Murman"
You can also watch the coverage, from a Russian perspective, of the French Navy seizing another dark fleet tanker, the allegedly Mozambique-flagged Denya, last week.
A more relevant story than Murmansk's cheese and sausage thief, which also made the local TV news. Feel free to click, but I watch this stuff so you do not have to.