The vulnerability of Iraq's oil export revenues was exposed Apr. 24 at 5 p.m. local time when suicide attackers detonated three explosive-laden boats near the country's southern export facilities of Basra and Khor al-Amaya, killing two US Navy sailors and one US Coast Guardsman.
According to a shipping source, no tankers berthed at the terminal or at anchorage at the pilot stations were damaged. Security at the terminal and surrounding areas, however, remains tight, with coalition forces personnel in the area, according to local information. The Basra terminal was reopened late Apr. 25.
Oil prices pushed upwards in early trading on Apr. 26 in London as traders reacted nervously to news of the attacks, with the price of benchmark Brent North Sea crude oil for June delivery climbing 47¢ to $33.56/bbl in early afternoon deals.
"Tensions in Iraq and Nigeria over the weekend are what initially pushed the market up," said one trader.
Iraq's exports 'vulnerable'
The attacks in Iraq were the first maritime raids against oil facilities since US troops invaded the country more than a year ago, and they represent a new tactic against the country's vital oil industry.
Previously, land-based insurgents had concentrated attacks on Iraq's northern oil field infrastructure, repeatedly hitting the main export pipelines extending from Kirkuk to the Turkish Mediterranean port of Ceyhan.
The US Navy's Maritime Liaison Office in Bahrain Apr. 26 issued an "interim" response, which said, "the coalition Navy remains absolutely committed to security in Iraqi waters, including protection of the offshore oil terminals. Existing security procedures have already been increased, including augmentation of force presence."
With the northern pipeline system largely idle due to damage and to the threat of further terrorist attacks, Iraq has relied almost exclusively on its two southern terminals for exports of some 1.7 million b/d of oil.
The suicide raids "remind people that oil supplies from Iraq are vulnerable," Mike Armbruster, a broker and analyst with Altavest Worldwide Trading Inc., San Juan Capistrano, Calif., told Bloomberg News.
Graham Sharp, director of Trafigura Ltd., a London-based oil trading firm, told OGJ that the market already has absorbed the brief closure, but that "sustained closure would push prices up." Sharp said a week's loss of exports from Iraq would be enough to send prices higher in what he called "a tight market." At 1.7 million b/d, a week's loss of Iraqi exports would come to around 12 million bbl.
Tankers not deterred
While the weekend explosions may raise the specter of further terrorist attacks, one shipping expert told OGJ that insurance rates might rise but that it would not be enough to deter tanker owners, at least for the short term. "This time around, the Basra security was found wanting, but there's still an impressive array of coalition power out there, and that's enough for a lot of people," the expert said.
"Iraq has to export oil. Tanker owners have to make money. There's business in the country, and tanker owners will go in to get it," he said, noting that tankers were being loaded with Iraqi crude just hours after the attacks at Basra and Khor al-Amaya.
Wrongful party unknown
Meanwhile, officials have yet to decide who actually is responsible for the blasts, which reportedly resembled attacks in 2000 and 2002—blamed on the Al-Qaeda terrorist network—against the USS Cole and the French oil tanker Limburg in Yemeni waters.
In those attacks, al-Qaeda militants used explosive-laden speedboats to ram the ships.
In the Apr. 24 attack, the sailors were killed as an interception team aboard a small craft prepared to board a dhow (an Arab lateen-rigged boat) that was nearing the 2 mile exclusion zone around the oil export facility at Khor al-Amaya. The dhow exploded as the team approached, overturning the sailors' craft and throwing them into the water. The two sailors were killed immediately and the Coast Guardsman died Apr. 25 in a Kuwait hospital.
Another two small speedboats headed to the main Basra terminal 7 km away but security forces opened fire on them and the boats exploded before they reached four oil tankers. One of the speedboats blew up 7 m from a berthed tanker, causing a power cut and halting the loading of oil, a port official said. The other speedboat exploded 50 m away, damaging the power generator, laboratories, workers' accommodation, and a desalination unit, said Iraqi Oil Minister Bahr al-Uloum.
Al-Uloum said it is his "feeling" that Al-Qaeda was behind the attack, but Comm. James Graybeal, a spokesman for the US Navy, reserved judgment, saying a small team from the US military based in Bahrain was investigating the Apr. 24 attacks.
Asked if the US military believed Al-Qaeda was behind the attacks, Graybeal said, "That's exactly why we sent in an investigation team to answer that and other questions."
A spokesman for the British forces in Basra agreed with that assessment. "It is too early to say who has done this, whether Al-Qaeda is responsible or [former Iraqi President] Saddam [Hussein] groups of the former regime. It is too early. We have to see what will come out of the investigation," Capt. Hisahm Halawi told Qatar's Al-Jazeera news service.
As war loomed over the region last year, military analysts said Iraqi conventional forces posed a minimal threat to shipping in the Persian Gulf, but attacks by the Al-Qaeda terrorist network, led by Osama bin Laden, were a more likely problem (OGJ Online, Mar. 19, 2003).
Still, no one could discount the possibility of attacks on shipping that could be launched by regular or even irregular components of Iraq's military forces, including remnants of its navy (OGJ Online, Mar. 24, 2003).
Especially chilling at the time was the discovery of Iraqi mines and explosive-laden speedboats in waters near Iraq's main gulf ports (OGJ, Mar. 31, 2003, p. 22).
