Asian buyers are back to negotiating spot cargoes of U.S. crude oil after the expected recovery of flows through the Strait of Hormuz ground to a halt early this week with the latest re-escalation in the U.S.-Iran tensions.
Asian refiners are now returning to the trade that saved their supplies in the early days of the war—purchasing massive volumes of U.S. spot cargoes.
At least three unnamed executives and traders involved in the sales and procurement of U.S. oil for Asian refiners told Bloomberg on Tuesday they had re-launched talks on spot American cargoes. This follows weeks of no spot deals in the hope of a steady recovery of the tanker traffic through the Strait of Hormuz.
Asian buyers were encouraged for a few weeks by the tentative recovery of the traffic through the Strait of Hormuz and the oil prices returning to pre-war levels.
But the re-escalation of the past few days, including the reinstated U.S. naval blockade to stop Iranian oil cargoes, prompted Asian oil buyers to return to American crude, and possibly other exporters who do not need the Strait of Hormuz to ship their oil to customers.
Since the Iran war began, refiners across Asia have sought to diversify their crude import slate away from Middle Eastern oil, as many, such as Japan, the Philippines, and Pakistan, depended heavily on crude oil cargoes that moved through the Strait.
The U.S., for its part, has seen record-high exports of crude oil since March.
The latest available EIA data showed a 15% jump in U.S. petroleum exports in April, compared to March, which marked the previous record, as the Strait of Hormuz crisis boosted demand for American crude and fuels.
Crude oil exports made up the largest share of total U.S. petroleum exports, averaging 5.6 million bpd in April, or 21% more than the previous record set in December 2023.
By Charles Kennedy for Oilprice.com
