KEY POINTS
- At least four Asian refiners bought US crude this week as the Strait of Hormuz stayed effectively closed.
- GS Caltex, Cosmo, Eneos and CPC secured US and West African cargoes for November delivery at hefty premiums.
- US shipments to Asia hit a record 2.35 million bpd in July as Gulf supply disruptions persisted.
At least four Asian refiners bought US crude this week as the Strait of Hormuz stayed effectively closed, pushing buyers to secure supplies from beyond the Gulf for delivery later this year, traders said.
Shipping traffic through the strait slipped below the monthly average toward the end of the week, as the United States and Iran traded competing claims over control of the waterway. Consequently, refiners saw little chance of a free flow returning soon.
Refiners lock in supplies
According to traders, strong refining margins and tight fuel supplies pushed companies to build crude inventories from outside the region. South Korea’s GS Caltex bought two million barrels of Mars crude from Shell for November arrival, at a premium of about $13 to $14 a barrel over the October Dubai benchmark.
Moreover, Japanese refiners joined the wave. Cosmo Energy Holdings bought Mars crude from Trafigura, while Eneos, Japan’s biggest refiner, took two million barrels of West Texas Intermediate from Trafigura for November delivery at a premium above $10 a barrel over the October WTI price. Furthermore, Taiwan’s state-owned CPC Corp bought two million barrels of WTI through a tender at a premium of about $8 to $9 over Dated Brent, and it also picked up West African crude.
A shift away from the Gulf
Still, the buying marks a sharp change for a region that long leaned on Middle Eastern oil. Before the Iran war, Asia drew more than half its crude from the Middle East, yet US shipments to the region hit a record 2.35 million barrels per day in July, according to ship-tracking firm Kpler.
Because the strait carries a large share of Gulf exports, its disruption keeps rippling through Asian supply chains. This week, India’s state-run Hindustan Petroleum and Mangalore Refinery and Petrochemicals also issued tenders for crude. Therefore, the scramble for barrels from the US, West Africa and elsewhere looks set to continue while the waterway stays contested.
