U.S. Sends Rare SPR Oil Cargo to Asia as Hormuz Crisis Reshapes Trade

A tanker loaded with crude oil from the U.S. strategic petroleum reserve has set off from the Gulf of Mexico to the Philippines in what is the first U.S. oil shipment to Asia since late 2022, Reuters reported, citing shipping data.

The rare move yet again highlights the rearrangement of energy flows resulting from the shutdown of normal tanker traffic in the Strait of Hormuz by Iran and the United States.

Prior to the war, Asia got as much as 80% of its crude oil from the Middle East, the report noted, with the Philippines specifically importing its crude from Saudi Arabia, Iraq, and the United Arab Emirates. The Southeast Asian nation had not imported oil from the United States since 2020, the data from Kpler showed.

Now, the Greece-flagged very large crude carrier Arosa is carrying 616,000 barrels of U.S. sour crude from the SPR, along with another 700,000 barrels of another sour blend from the U.S., which is also selling oil from the strategic petroleum reserve to Europe, and emptying it further in the process. The Biden administration reduced the amount of oil in the SPR by over 180 million barrels back in 2022 as prices spiked on Western sanctions against Russia following its incursion into Ukraine. Now, the U.S. is releasing another 172 million barrels as part of a broader release of 400 million barrels from IEA member states to counter the effects of the Strait of Hormuz closure.

Concern is growing, however, that this release will not be enough to offset lost supply from the Middle East, which is estimated at between 14 and 15 million barrels in daily production. With peace between Iran and the United States still a distant prospect, the supply situation in oil is only set to become increasingly complicated in the coming weeks, with Asia bearing the brunt due to its heavy dependence on Middle Eastern oil.

By Charles Kennedy for Oilprice.com

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