Desh Vishal, an oil super tanker owned by the state-run Shipping Corporation of India (SCI) has become the first Indian-flagged crude carrier to allow Indian Navy personnel to board the ship while it sailed through the Strait of Hormuz — the world’s busiest transit lane for seaborne oil shipments — where two separate attacks on oil tankers recently have put crude movement from the Persian and Arabian Gulf in danger.

After a meeting in New Delhi on Friday between the Indian Navy, the Indian National Shipowners’ Association and the Director General of Shipping, it was decided that Indian-flagged crude tankers ferrying crude from the region seeing rising tensions between Iran and the United States, can make use of escort from the Indian Navy – one officer and two sailors while transiting the Strait of Hormuz.

On Saturday, Indian Navy personnel boarded and disembarked Desh Vishal while it was passing through the Strait of Hormuz. The Indian Navy will board an Indian-flagged LPG tanker owned by a private firm on Sunday on its passage through Hormuz, at least two people briefed on the development said, asking not to be named.

SCI could not be reached immediately for comment as its office was closed due to Sunday.

“The escort service has already started with Deshi Vishal. Indian Navy guards will board other ships also on a-case-to-case basis. It is an option, whoever wants can make use of this. Indian-flagged crude and petroleum product tanker owners can either allow Naval personnel to board the vessel or they can request the Navy to carry out inspection of the ship’s hull/structure. It is up to the master of the ship and the company, what they want,” a government official said.

“It is an option for the tanker owners, but we are hoping that they will all agree. The SCI vessel has already taken it. We’ll see how it progresses,” he said.

US-Iran tensions

The attack on the oil tankers is seen as a fall-out of the sanctions re-imposed by the US last year on Iran over its disputed nuclear program, choking its oil exports.

While India has virtually stopped buying crude from Iran, the Strait serves as a vital shipping route for imports from other Gulf suppliers.

Located between Oman and Iran, the Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. It is the world's most important oil shipping route because of the large volumes of oil that flow through the Strait.

In 2018, its daily oil flow averaged 21 million barrels per day (b/d), or the equivalent of about 21 per cent of global petroleum liquids consumption.

Also read:Strait of Hormuz: the world's most important oil artery

Flows through the Strait of Hormuz in 2018 made up about one-third of total global seaborne traded oil.

More than one-quarter of global liquefied natural gas trade also transited the Strait of Hormuz in 2018, according to the US Energy Information Administration (EIA), a website run by the US Department of Energy.

There are limited options to bypass the Strait of Hormuz. Only Saudi Arabia and the United Arab Emirates have pipelines that can ship crude oil outside the Persian Gulf and have the additional pipeline capacity to circumvent the Strait of Hormuz.

Saudi Arabia, the world’s top oil exporter, moves the most crude oil and condensate through the Strait of Hormuz.

“EIA estimates that 76 per cent of the crude oil and condensate that moved through the Strait of Hormuz went to Asian markets in 2018. China, India, Japan, South Korea, and Singapore were the largest destinations for crude oil moving through the Strait of Hormuz to Asia, accounting for 65 per cent of all Hormuz crude oil and condensate flows in 2018,” it said on its website.