North Asian refiners have increased buying activity to secure U.S. crude oil supply as an alternative to the Middle Eastern crude that may not make it outbound from the Strait of Hormuz as the U.S.-Iran stalemate continues and the chokepoint remains effectively closed.
At least four Asia-based refiners have bought U.S. crude volumes this week alone, traders told Reuters on Friday.
This week, tanker traffic – and shipping traffic as a whole – at the Strait of Hormuz has slumped further, according to observable transits with AIS positioning on.
Amid the Hormuz stalemate, Asian refiners are looking further afield for alternative supply as tight fuel markets and sky-high refining margins encourage refinery runs, if there is enough crude available.
In the deals this week, GS Caltex of South Korea bought 2 million barrels of Mars crude from Shell for delivery in November, at a premium of $13-14 above the Dubai benchmark for October, according to Reuters’ trade sources.
Cosmo Energy Holdings, one of the biggest refiners in Japan, also bought Mars, from commodity trader Trafigura. Japan’s biggest refiner by capacity, Eneos Corp, Japan’s biggest refiner, purchased 2 million barrels of West Texas Intermediate (WTI) crude from Trafigura for November delivery, priced at a premium of over $10 per barrel above the October WTI price.
CPC Corp, the state-owned energy company of Taiwan, acquired 2 million barrels of WTI via a tender at a premium of around $8 to $9 per barrel to Dated Brent, according to Reuters’ sources.
Further south in Asia, some state-held Indian refiners are also seeking spot crude supply as term deliveries are constrained by the ongoing crisis in the Middle East and its key oil chokepoint, the Strait of Hormuz.
Mangalore Refinery and Petrochemicals Limited (MRPL) and Hindustan Petroleum Corporation Limited (HPCL) are looking to buy a combined 6 million barrels of crude oil via spot tenders, Reuters reported earlier this week, citing tender documents it has seen.
By Tsvetana Paraskova for Oilprice.com
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