Tankers carrying jet fuel and diesel have sharply diverted toward Asia and away from their initial destinations in the west as the world’s most important oil-consuming region is grappling with a supply crunch amid halted traffic at the Strait of Hormuz.
At least five vessels with diesel and jet fuel cargoes originating from the Gulf and India have made a U-turn near Africa’s southeast coasts and are now signaling their destinations are in Asia, tanker-tracking data compiled by Bloomberg showed on Monday.
In recent days, disrupted crude flows from the Middle East to Asia due to the de facto closure of the Strait of Hormuz has pushed Asian refining margins to the multi-year highs.
Asian refiners, particularly state-held majors heavily dependent on Middle East oil supply, are considering slashing crude run rates by up to 30% amid the war in Iran that is holding up millions of barrels of Middle Eastern crude stuck near the Strait of Hormuz.
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In addition, China has told energy companies to suspend new fuel export contracts and try to cancel already arranged fuel shipments abroad as global fuel markets tighten amid the Middle Eastern war.
As a result of all these factors, Asian fuel buyers are massively outbidding customers in Europe and other regions to secure supply.
Of the five tankers that have recently diverted to Asia, three had departed from India and two were out of the Persian Gulf, before the Strait of Hormuz became de facto a no-go zone last week, according to Bloomberg’s vessel-tracking.
Two diesel, two jet fuel, and one clean petroleum product cargoes are now directed to either Singapore, East Asia, or Southeast Asia, after initially signaling for Rotterdam, the Red Sea, or the Cape of Good Hope, the data compiled by Bloomberg showed.
Kuwait announced this weekend that it had cut crude oil production and refining output, “which will tighten global jet fuel availability,” Ivan Mathews, Head of APAC Analysis at Vortexa, wrote in a note on Monday.
By Tsvetana Paraskova for Oilprice.com
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