Kuwait, one of OPEC’s top producers and one of the exporters most affected by the near-closure of the Strait of Hormuz, is offering its crude to Asian buyers for the first time since the Iran war choked off transit through the critical chokepoint.
At least 4 million barrels of Kuwaiti crude loaded on two supertankers capable of carrying 2 million barrels each are being directly offered by the national oil company Kuwait Petroleum Corporation (KPC) to buyers in China and South Korea, anonymous traders with knowledge of the matter told Bloomberg on Tuesday.
The two very large crude carriers (VLCC) have cleared the Strait of Hormuz and the cargoes can now be taken to ports in Asia promptly, according to the traders.
The first Kuwaiti crude offering of cargoes that have passed through the world’s most critical oil chokepoint since February 28 signal that some of the crude supply out of the Persian Gulf is making its way to buyers despite the collapse of tanker traffic and the months-long delays in deliveries.
Unlike Saudi Arabia or the United Arab Emirates (UAE), Kuwait does not have a pipeline alternative to bypass the Strait of Hormuz, which has severely stifled its crude oil exports in recent months.
However, traffic at Hormuz is becoming increasingly opaque and difficult to track, with the market and analysts flying blind in guesstimating how much crude supply from the Middle East is trickling through the Strait.
Kuwait will likely need up to 12 weeks after the Strait of Hormuz re-opens to restore the oil production that has been curtailed since the war began on February 28, a KPC official said last week.
Kuwait doesn’t have an export outlet not depending on the Strait of Hormuz.
Iraq, whose exports have been also severely restricted, at least has a pipeline north through Kurdistan to the Turkish Mediterranean port of Ceyhan, whose capacity Baghdad plans to triple in three months to about 770,000 barrels per day.
Meanwhile, Saudi Arabia has hiked flows on the East-West pipeline to maximize oil exports from the Red Sea port on Yanbu, while the UAE started construction on a new pipeline to Fujairah, which will bypass Hormuz and will become operational next year.
By Charles Kennedy for Oilprice.com
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