Iran says it is using new tactics against shipping in Hormuz to keep oil prices high

Iran is saying out loud what the shipping market already suspected: the attacks on tankers in the Strait of Hormuz are a strategy, and the price of oil is part of the target.

Two senior Iranian officials told Reuters that Tehran started using different offensive tactics against vessels it considers in violation of its restrictions about ten days ago, and that the change has led to an increase in attacks. The operations have expanded beyond the strait into the Gulf of Oman and waters near Qatar and the United Arab Emirates. An American military official said the Islamic Revolutionary Guard Corps is using observers in small boats to identify targets, after American strikes damaged Iranian radar systems. Maritime security reports recorded at least five incidents involving commercial vessels over 48 hours. On Tuesday the United Kingdom Maritime Trade Operations agency said a container ship and a tanker were hit by unknown projectiles inside the strait.

The officials' stated purpose is leverage. Tehran wants oil prices to stay high and to frustrate American efforts to bring them down before the November 3 midterm elections. The market moved on the news: Brent crude futures rose to 106.03 dollars a barrel and American West Texas Intermediate to 94.42 dollars a barrel as of Wednesday. Before the war began on February 28, roughly one fifth of the world's oil and liquefied natural gas trade passed through Hormuz, which is why a handful of projectiles in a narrow strait can move prices on every continent.

The admission matters beyond the price. A state that announces it is targeting civilian shipping to influence another country's election has given up the deniability that usually surrounds such campaigns, and it has done so while its Houthi allies in Yemen strike Saudi airports and the Aramco headquarters at the other end of the Arabian peninsula. This report describes reported prices and official statements. It is not financial advice.