Bloomberg News

Shipowner Bombed in 1980s Says Gulf Oil Flow to Withstand Crisis

January 09, 2012

Jan. 6 (Bloomberg) -- A Greek shipowner whose family’s oil tankers were hit by missiles during the 1980s Iran-Iraq war said he expects Persian Gulf crude exports to continue after Iran’s threats to block shipments through the Strait of Hormuz.

Stable prices of oil, gold and the dollar are a sign to investors the Islamic republic won’t halt shipments in response to a proposed European Union ban on its crude exports, Polys Haji-Iannou, 52, said. Iran’s Vice President Mohammad Reza Ramimi threatened on Dec. 27 to block the transit point for a fifth of oil traded worldwide if sanctions are imposed in response to the country’s nuclear program.

“Things will calm down within the next one or two weeks,” Haji-Iannou, whose brother is EasyJet Plc founder Stelios, said by phone from Athens today. “Even if there are EU sanctions, they will calm down.”

Iran’s Islamic Revolutionary Guard Corps is planning to hold naval exercises in the Persian Gulf near the strait, Brigadier General Ahmad Vahidi was cited as saying by the Fars news agency today. The drills would be held in Iran’s southern waters in the “near future,” he said.

European foreign ministers aim to announce harsher penalties on the Persian Gulf nation’s energy and banking industries at a meeting Jan. 30, according to EU spokesman Michael Mann. The region moved closer to banning oil imports from the country yesterday after Greece lifted objections to an embargo.

The U.S. also supports further measures on Iran over its nuclear program, which the U.S. and several allies say poses a nuclear weapons threat. The Islamic republic says its nuclear efforts are for civilian purposes and to generate electricity.

New York Crude

Since Rahimi’s threat, New York-traded crude has gained 0.9 percent to $102.24 a barrel, gold for immediate delivery has advanced 1.9 percent to $1,623.07 per ounce, and a euro buys 78 cents compared with 77 cents.

Haji-Iannou, whose father Loucas had 52 oil-carriers as part of the Troodos Shipping and Trading Ltd. fleet during the so-called Tankers War, said 20 of them were shipping crude from the Persian Gulf during the conflict, which ended in 1988. In total the ships were hit by missiles 28 times, he said. Polys started learning the family business as a child in the 1970s.

While several ships were hit twice, none sank because the missiles targeted their engine rooms and not their hulls, he said. Seven sailors on the family’s tankers died during the conflict. The vessels that were struck were taken to Dubai and were repaired or scrapped.

The shipowner has a fleet of 25 tankers, after selling 30 in 2009, Haji-Iannou said, adding prices have declined by about 40 percent since then.

Tanker Industry

“The Haji-Iannou family has a history of shrewd investment in the tanker industry,” said Halvor Ellefsen, a shipbroker at Galbraith’s Ltd. in London who has worked with shipowner. “Polys has made great decisions, ahead of the market consensus, just like his father did in the 1980s, when many other owners were suffering.”

An escalation in the Persian Gulf would be financially beneficial to tanker owners even if insurance costs rose as oil companies would have to pay a premium to hire vessels at risk of damage, he said, adding that Iran wouldn’t be able to enforce a blockade.

“I don’t think they can achieve that,” Haji-Iannou said. “I think it will be a passage going through there with navy escorts of frigates, going and loading the oil from the oil terminals and taking it out.”

--With assistance from Grant Smith and Nicholas Larkin in London and Anthony DiPaola in Dubai. Editor: Sharon Lindores

To contact the reporter on this story: Alaric Nightingale in London at anightingal1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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