The waters outside the Strait of Hormuz have been so overcrowded with ship-to-ship transfers to keep oil flowing out of the Persian Gulf that the STS operations are expanding into India’s West Coast.
A total of 82 cargoes, or about 680,000 barrels per day (bpd), were transferred onto larger ships in the Indian Gulf of Kutch in September, according to vessel-tracking data by Vortexa cited by The National.
The Gulf of Kutch, which opens towards the Arabian Sea facing the Gulf of Oman, has become another point of STS for the Gulf oil producers. The Middle Eastern oil exporters look to keep their supplies to Asian markets flowing, despite increased risks to tanker journeys in the Strait of Hormuz.
The nearest STS zones off Fujairah in the UAE and Sohar in Oman are hitting operational limits, so the activity spills over as far as India’s West Coast, Varaleka Pant, senior market analyst at Vortexa, told The National.
The congestion of the STS transfers just outside the Strait of Hormuz signals that the shuttle-shipping with which Gulf producers kept exporting oil via Hormuz has its operational limits. Cargoes could be delayed or in some cases the transfer must take place further away from the Strait of Hormuz.
Analysts diverge on the scale at which STS transfers are moving eastward toward the Indian Ocean, but all recognize that the congestion at the Oman and UAE zones is prompting some producers and buyers to seek transfers further along the route to Asia.
“The STS transfer itself is relatively low risk. The real risk lies in getting the barrels out of the west of Hormuz to the STS zone,” Vortexa’s Pant told The National.
The most recent pricing moves for the Middle Eastern grades reflect the degree of risks associated with moving barrels out of Hormuz.
Iraq, for example, is offering Basrah Medium for loading in October at a discount of $34.50 a barrel and Basrah Heavy at a $37 discount to regional benchmarks, as Baghdad doesn’t have any bypass route around Hormuz.
The UAE, however, receives a premium for its Murban crude, which moves through a pipeline to Fujairah outside the Strait of Hormuz.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com
- Russian Strikes Cut Power to 600,000 Ukrainians Days After U.S. Diesel Deal
- TotalEnergies Eyes Massive Profit Windfall as Refining Margins Soar
- India’s Annual Wind Power Installations to Double by 2030
