COLUMN -Shipping strikes, oil price spikes and a deadly new Gulf crisis

LONDON, March 19 (Reuters) - As Somali pirates hijacking giant cargo vessels and tankers from tiny motorised skiffs wreaked havoc across the region from the mid-2000s to the early 2010s, a tiny group of UK military reservists in a bungalow in the gardens of the British diplomatic mission in Dubai found themselves fielding daily calls from panicked merchant ships.

The group – almost all Royal Navy part-time reservists who have volunteered for a six-month or longer spell – made up a team known simply as UK Maritime Trade Operations (UKMTO) Dubai.

When I visited them in spring 2013, their number included a school janitor from Glasgow and a handful of others, manning a hotline and operations room that any shipping firm or vessel could call in an emergency to report a real or suspected pirate or militant attack.

That team still exists today – still with much of its operations based somewhere in Dubai, albeit now also with a telephone number based in the southern British city of Portsmouth that has been home to the Royal Navy for several centuries.

Recent events in the Middle East have ramped up their importance once again, putting them at the heart of the face-off between the United States, Israel and Iran.

With Iranian drones, missiles and mines now blocking transit of almost every ship carrying oil, gas or other essential goods through the Hormuz Strait between Iran and the Arabian peninsula, the daily updates from UKMTO – and even more the incidents they cover – are now helping shape global shipping flows as well as prices across international markets.

Those events are also now shaping the actions of great powers, from the postponement of face-to-face talks between U.S. President Donald Trump and Chinese President Xi Jinping – a meeting likely to be critical to shaping the wider Washington-Beijing face-off over the future of Taiwan – to the movements of major military forces and critical commodities.

The implications of that are potentially enormous. As things stand, the U.S. is maintaining what Trump referred to as an “armada” in the Indian Ocean within striking distance of the Middle East, supported by U.S. carrier battle groups and warplanes based in Europe as well as an amphibious task force including several thousand U.S. Marines now heading to the region.

The shipping flow in and out of the Gulf, meanwhile, remains almost entirely suspended following a string of attacks this month on tankers, the first time that has happened since the 1980s, blasting the oil price skywards to well over $100 a barrel, its highest since 2022.

The conflict, meanwhile, continues to escalate in unexpected ways – most recently on Thursday with apparent Iranian missile strikes on several Qatari liquefied natural gas facilities. A day earlier Israel struck Iran's huge South Pars gasfield, the world's largest offshore ​natural gas deposit which it shares with Qatar.

According to UKMTO, Wednesday and Thursday this week also saw ships near Qatar and the United Arab Emirates struck by unidentified projectiles – most likely Iranian drones or missiles. According to UKMTO, as of Thursday almost 20 vessels in the Gulf had been either the victims of confirmed attacks or “suspicious incidents” involving tiles since February 28, with a geographic range stretching from Iraqi waters through the Hormuz chokepoint.

According to those who track maritime traffic closely using publicly available information, only a handful of non-Iranian vessels have so far risked entering or leaving the Gulf this month. Officials in Tehran have warned that Iran has the ability to maintain the current conflict for months, a prospect that might massively distort both energy costs and shipping flows.

A GLOBAL GAME OF CHICKEN

Earlier this month, Iran's Islamic Revolutionary Guard Corps suggested the world should brace for oil prices above $200 a barrel, almost twice the current levels. Trump, meanwhile, warned that with the U.S. now largely energy independent it would resist such pressure.

The rest of the world, however, is already under pressure – and that is already beginning to feed rapidly into U.S. markets, politics and policy, undermining the U.S. stock markets in which many Americans have their savings, prompting talk of U.S. interest rate rises and inevitably putting pressure on Trump’s Republican allies ahead of November U.S. mid-term elections.

For all the focus on what the United States and Iran might do, as well as the implications across the wider Middle East, it may in fact now be European, Pacific and African nations that have the most to lose: certainly, they are the most dependent on Mideast resources.

So far, the one nation that appears to have managed to get at least two liquefied petroleum gas tankers out of the Gulf is India. According to sources speaking to Reuters journalists covering the subcontinent, late last month India itself seized three Iranian vessels in its waters reportedly accused of smuggling Iranian oil and evading U.S. sanctions.

Those sources also tell my Reuters colleagues Tehran is now demanding those vessels be released as a precondition for allowing more Indian vessels to safely leave the Gulf.

Other dynamics may well be yet more complex still. Most mainland European countries – which have become much more dependent on Gulf energy since diversifying away from Russian oil and gas following its 2022 invasion of Ukraine – are publicly rejecting Trump administration calls to join their U.S. counterparts in a broader campaign against Iran.

Britain, the European nation with the strongest tradition of joining U.S. operations, currently has no naval forces in the Gulf and only a handful of jets in Cyprus – while what appears to be its one available air-defence destroyer, HMS Dragon, is reported headed for the eastern Mediterranean where it might support defence of Britain’s Cyprus airfields.

Whether Britain itself has the appetite to support further U.S. strikes with its own forces remains unclear – so far no other U.S. ally appears to have done so apart from Israel, with multiple reports that it was Israeli enthusiasm for launching further strikes against Iran that may have persuaded the Trump administration it had little choice but to join that effort.

WHAT COMES NEXT

How much further escalation might be on the cards, of course, remains the most critical question both for markets, nations and indeed individuals caught up in the current conflict.

So far, at least, this week’s events show a messy picture. According to maritime intelligence firms tracking ships by their Automatic Identification System (AIS) – a system which can be turned off by ships wishing to complicate efforts to publicly trace their movements – the number of vessels starting to leave and enter the Gulf is already beginning to gradually tick up.

But while that might suggest a crisis easing, the scale of apparent Iranian strikes on Thursday on Qatari energy facilities suggests a very different picture. Perhaps most closely watched of all is the amphibious assault ship USS Tripoli with its embarked Marines.

That has sparked immediate speculation of a ground or amphibious assault – although in reality, that force is far too small for such a mission. It could just about potentially be used to seize a single Iranian location such as the energy infrastructure on Kharg Island. Alternatively, U.S. airpower could devastate that infrastructure.

The problem with any strategy along those lines, is that despite the death of Supreme Leader Ayatollah Ali Khamenei and numerous other senior Iranian officials both during the U.S.-led “Epic Fury” strikes this month as well as other Israeli and U.S. operations last year, Tehran appears to still have the capability to strike energy facilities across the Gulf as well as shipping.

Having been continuously refreshing its own war plans against Iran ever since the 1979 Iranian revolution, the Pentagon almost certainly already has a range of options under consideration.

But it will also be hoping very much it does not have to use them – not least because doing so would consume munitions, casualties and attention that it would much rather be put to what it sees as a much greater threat: that of a rising China.

European nations will have their own similar concerns, particularly those such as Germany already heavily preoccupied with the threat from Russia. Other powers across the Middle East may also be hoping for a route towards de-escalation.

The truth, though, is that this fight has been a long time coming – and no major power believes that more than Israel, which has long viewed the threat of a potentially nuclear-capable Iran with long-range missiles as an existential threat.

Also playing a long game has been Britain’s Royal Navy, which decided after the September 11, 2001 attacks to set up the UKMTO operation in Dubai suspecting further conflict might be coming. Some 25 years later, Britain’s cash-strapped naval forces no longer have enough vessels to patrol let alone control the Gulf – its last warships there have returned to Britain or been scrapped.

The tiny reservist team at UKMTO, however, are still earning their money, taking reports from any ship that wishes to report on “suspicious events” as well as deliberate strikes – and, like everyone else, watching on tenterhooks to see whether this crisis will worsen further or is nearing its end.