Persian Gulf Tension Rises As Iran Claims Spy Ring Arrests, Britain Demands Ship Release

Investors on Monday continued to watch mounting tension in the Persian Gulf region as Iran said it arrested several Iranians working as American spies, Britain demanded that Iran’s government release a captured British tanker and its crew and U.S. warships patrolled nearby.

Oil prices were up slightly amid fears of a rising risk of war.

U.S. warships in the Straits of Hormuz late last week reported a series of encounters with Iranian military vessels, including an Iranian ship and helicopter shadowing U.S. vessels.

The U.S. Navy said it shot down an Iranian drone Thursday evening. Officials in Tehran and Washington both said they hoped to avoid war.

The rising tension follows the Trump administration’s decision to back out of a nuclear agreement with Iran, which has responded by resuming a nuclear program the deal had sought to curtail. The end of the agreement brought renewed sanctions on Iran, with the U.S. seeking to cut Iranian oil exports.

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Iranian officials ratcheted up the stakes by announcing Monday that the country’s intelligence forces arrested 17 Iranians that it accused of operating as a spy ring after having been recruited and trained by the CIA.

An Iranian intelligence official said in a televised address that some of those arrested had already been sentenced to death.

Trump said the information is false. 

British Tanker Impounded

On Monday, Britain demanded that the Iranians release the British-flagged oil tanker Stena Impero and its crew of 23.

The ship was seized Friday as it sailed through the Strait of Hormuz in what was widely seen as an act of retaliation for the earlier British capture of an Iranian ship off the coast of Gibraltar. Reuters reported the Stena Impero is being held in the Iranian port of Bandar Abbas with the 23 crew members still aboard. Most of the crew are reportedly Indian nationals.

“We do not seek confrontation with Iran but it is unacceptable and highly escalatory to seize a ship going about legitimate business through internationally recognized shipping lanes," a spokesman for British Prime Minister Theresa May said.

On Sunday, Britain instructed British ships to avoid sailing in the Strait of Hormuz.

Oil Prices

Brent crude oil was trading 1.38% higher at $63.33 at the time of publication Monday. 

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