Key facts
- North Asian refiners are increasing purchases of U.S. crude oil.
- The Strait of Hormuz remains effectively closed due to the U.S.-Iran stalemate.
- Several Asian refiners have bought U.S. crude volumes this week.
- GS Caltex, Cosmo Energy Holdings, Eneos Corp, and CPC Corp have all purchased U.S. crude.
- Indian refiners are also seeking spot crude supply.
North Asian refiners are actively seeking U.S. crude oil as an alternative to Middle Eastern supplies that are facing transit issues through the Strait of Hormuz. The ongoing U.S.-Iran stalemate has effectively closed the vital chokepoint, prompting refiners to look further afield for crude.
This week alone, at least four Asia-based refiners have increased their buying activity for U.S. crude. The situation is exacerbated by tight fuel markets and high refining margins, which encourage refinery operations provided sufficient crude is available.
Among the transactions, South Korea's GS Caltex secured 2 million barrels of Mars crude from Shell for November delivery, at a premium of $13-14 above the Dubai benchmark. Japan's Cosmo Energy Holdings also purchased Mars crude from commodity trader Trafigura. Eneos Corp, Japan's largest refiner, acquired 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. Taiwan's state-owned CPC Corp obtained 2 million barrels of WTI via a tender, priced at a premium of around $8 to $9 per barrel to Dated Brent.
Further south, Indian refiners are also experiencing constraints on term deliveries due to the Middle East crisis. Mangalore Refinery and Petrochemicals Limited (MRPL) and Hindustan Petroleum Corporation Limited (HPCL) are reportedly looking to purchase a combined 6 million barrels of crude oil through spot tenders.