US-Iran Standoff- Oil Prices Jump After 2 Tankers Attacked in Gulf

DUBAI -- Two oil tankers near the strategic Strait of Hormuz were reportedly attacked on Thursday, an assault that left one ablaze and adrift sending world oil prices soaring. The crews of two oil tankers were evacuated off the coast of Iran and the U.S. Navy rushed to assist amid heightened tensions between Washington and Tehran.  

The escalation came hours after Iran said it will not negotiate with the United States, rejecting Japanese Prime Minister Shinzo Abe's efforts to broker dialogue between the two foes amid heightened tensions in the Middle East.

Supreme Leader Ayatollah  Sayed Ali Khamenei, who has ultimate authority over Iran's policy direction ,warned that while Tehran doesn't seek nuclear weapons, "America could not do anything" to stop Iran if it did.

The comments came during a one-on-one meeting capping Japanese Prime Minister Shinzo Abe's high-stakes visit in Tehran that sought to ease Iran-U.S. tensions, suggested the efforts had failed.

Iran said its navy had rescued 44 crew members after the two vessels caught fire in "accidents" off its coast.

Reports said the first incident occurred on board the Front Altair at 8:50 am (0420 GMT) 25 nautical miles off Bandar-e-Jask in southern Iran.

The Marshall Islands-flagged tanker was carrying a cargo of ethanol from Qatar to Taiwan.

"As the ship caught fire, 23 of the crew jumped into the water and were saved by a passing ship and handed over to the Iranian rescue unit," an IRNA report said.

"An hour after the first accident the second ship caught fire at 9:50 am 28 nautical miles off the port."

The Panama-flagged Kokuka Courageous was headed to Singapore from Saudi Arabia with a cargo of methanol, and 21 of its crew jumped and were rescued, according to IRNA.

"The 21 crew of the vessel abandoned ship after the incident on board which resulted in damage to the ship's hull starboard side," Singapore-based BSM Ship Management, which owns the Kokuka Courageous, said.

Tehran said it has dispatched a helicopter from the port of Bandar-e-Jask to the ships' location for "further investigation".

The US Fifth Fleet said: "We are aware of the reported attack on tankers in the Gulf of Oman.

"US naval forces in the region received two separate distress calls at 6:12 am. local time and a second one at 7:00 am."

Global oil prices spiked around four percent immediately after the reports of the attack. Benchmark Brent oil was trading at $61.74 a barrel, up about three percent.

The Gulf of Oman lies at the other end of the strategic Strait of Hormuz from the Gulf, part of a vital shipping lane through which at least 15 million barrels of crude oil and hundreds of millions of dollars of non-oil imports pass.

On May 12, four oil tankers -- two Saudi, one Norwegian and one Emirati -- were damaged in still unexplained attacks in the Gulf of Oman off the United Arab Emirates.

The latest incident in the region comes after the U.S. alleged that Iran used mines to attack four oil tankers off the nearby Emirati port of Fujairah last month. Iran has denied being involved, but it comes as Iranian-backed rebels in Yemen also have launched missile and drone attacks on Saudi Arabia, a key US ally.

The timing of Thursday's reported attack was especially sensitive as Abe's high-stakes diplomacy mission was underway in Iran. Japan's Trade Ministry said the two vessels had "Japan-related cargo."

On Wednesday, after talks with Iranian President Hassan Rouhani, Abe warned that any "accidental conflict" that could be sparked amid the heightened U.S.-Iran tensions must be avoided.

His message came just hours after Yemeni fighters attacked a Saudi airport, striking its arrivals hall before dawn and wounding 26 people Wednesday.

Earlier Abe told Ayatollah during their roughly 50-minute meeting that Japan supports the nuclear deal, voicing hope that Iran will abide by its commitments, according to a senior Japanese government official.

Among the leaders of countries with close ties to the United States, Abe is the first to meet with Iran leader since the Trump administration's abrupt withdrawal from the nuclear deal in 2018.

"We have no doubt about your good will and seriousness, but ... I don't regard Trump as deserving any exchange of messages," Ayatollah Khamenei reportedly told Abe.

A statement released after Abe's meeting with the Supreme Leader suggested a tense exchange between the two.

Ayatollah also said Iran remained opposed to building atomic weapons, but offered a challenge to Trump.

"You should know that if we planned to produce nuclear weapons, America could not do anything," he said.

Meanwhile, in Tokyo, Japan's Chief Cabinet Secretary Yoshihide Suga, a top government spokesman, told reporters that Abe's trip was intended to help de-escalate Mideast tensions -- not specifically mediate between Tehran and Washington. His remarks were apparently meant to downplay and lower expectations amid uncertain prospects for Abe's mission.

Tensions have escalated in the Mideast as Iran appears poised to break the 2015 nuclear deal with world powers, an accord that the Trump administration pulled out of last year.

Iran's nuclear deal, reached in 2015 by China, Russia, France, Germany, the United Kingdom and the U.S., saw Tehran agree to limit its enrichment of uranium in exchange for the lifting of crippling sanctions. Western powers feared Iran's atomic program could allow it to build nuclear weapons, although Iran long has insisted its program was for peaceful purposes a claim endorced by IAEA.

In withdrawing from the deal last year, Trump pointed to the accord not limiting Iran's ballistic missile program and not addressing Tehran's growing influence across the wider Middle East. Those who struck the deal at the time described it as a building block toward further negotiations with Iran, whose Islamic government has had a tense relationship with America since the 1979 revolution that toppled the US backed monarchial system.

Already, Iran says it quadrupled its production of low-enriched uranium. Meanwhile, U.S. sanctions have cut off opportunities for Iran to trade its excess uranium and heavy water abroad, putting Tehran on course to violate terms of the nuclear deal regardless.