Asian Oil Buyers Look to US Crude Again as Iran War Intensifies

The escalation of hostilities between the Washington and Tehran and the virtual standstill in observable traffic through the Strait of Hormuz is prompting Asian oil refiners to try and buy more US crude.

(Bloomberg) — The escalation of hostilities between the Washington and Tehran and the virtual standstill in observable traffic through the Strait of Hormuz is prompting Asian oil refiners to try and buy more US crude. At least three executives involved in selling US oil and procuring for Asian processors said they have once again started to negotiate for spot sales of American cargoes, asking not to be named as they’re not authorized to speak publicly.

The upsurge in interest follows a hiatus when discussions went quiet due to waves of backlogged supplies from the Middle East hitting the spot market. Those flows are now under threat as the ceasefire looks all but over. Attacks on ships have increased in recent days, while Washington reimposed a blockade of Iranian ports and President Donald Trump proposed charging a 20% toll on goods passing through Hormuz with US support.

The fee would equate to roughly $30 million for a supertanker based on current oil prices. That compares with the $2 million that Iran was charging for a similar voyage earlier in the war. The deteriorating situation has upended shipping and oil markets, which had, until recently, been busy recalibrating as they adjusted to a recovery in energy flows from the Persian Gulf.

As of Tuesday, observable traffic through Hormuz had all but ceased, although Iran has been sneaking crude tankers out of the gulf with their transponders turned off. —With assistance from Yongchang Chin.