Tanker Attacks Escalate, Oil Prices Surge

Both Iran and Iraq attacked ships in the Persian Gulf today, raising fears that a U.S. Navy flotilla escorting Kuwaiti vessels might soon be drawn into the “tanker war” and sending oil prices up sharply.

Iranian Revolutionary Guards in three small gunboats circled the 20,526-ton Kuwaiti container ship Jebel Ali and sprayed machine-gun fire and rocket-propelled grenades into its hull, damaging 35 containers, shipping sources said.

The 32-member crew and the wives of two crewmen were safe and the ship reached Dubai for repairs of minor damage from the attack, the sources said.

Hours later, Iraqi jets flew a long-range mission to Iran’s southern gulf oil terminal at Larak Island. LLoyds Shipping Intelligence said they fired a missile into the engine room of the 226,319-ton Iranian supertanker Shoush. The extent of the damage or casualties was not immediately known.

5th Ship Hit by Iraq

It was the fifth ship Iraq hit since Saturday when Baghdad ended a six-week lull in raids on Iranian offshore oil targets because Tehran refused to accept a United Nations cease-fire demand. (Earlier raids, Page 4.)

The Iraqi Defense Ministry’s newspaper, Al Qadisiya, said future raids on Iran’s oil and other economic facilities “will be much more intensive in the forthcoming days.”

Western diplomats said Baghdad had clearly raised the ante by resuming attacks on Iran’s offshore oil facilities and tankers and that retaliation by Tehran had been expected.

“This is a clear escalation and the threat of a clash with U.S. warships if Iran retaliates has to be seen as real,” one diplomat said.

Oil Prices Surge in N.Y.

As violence escalated in the Persian Gulf region, oil prices surged on the New York Mercantile Exchange today. West Texas intermediate, the benchmark U.S. crude, shot up 48 cents to $19.87 a barrel shortly after the opening. The crude moved as high as $19.95 in the first few minutes of trading and then gave up some ground.

Observers said the escalating tensions between Iraq and Iran raised the prospect that oil supplies could be disrupted from the vital gulf oil channel, where U.S. Navy ships have been escorting Kuwaiti tankers flying the American flag as protection against Iranian attack. Kuwait has helped Iraq finance the 7-year-old war against Iran.