Japanese Refiners Buy Middle East Crude Through Ship-to-Ship Transfers

Several Japanese oil tankers are returning to the Middle East to receive crude shipments for Japan's refineries, but none of these vessels are navigating the Strait of Hormuz to enter the Persian Gulf. According to Bloomberg, a growing number of Japan-owned or Japan-bound tankers, many of which had stayed out of the Middle East since the start of the Iran war, are now returning to the Gulf of Oman to engage in ship-to-ship (STS) transfers offshore Oman or Fujairah.

For the past seven months, Japan-linked tankers that had avoided the Middle East region have been picking up cargoes through STS transfers offshore India or Southeast Asia. However, the vessels that were previously trapped in the Persian Gulf have started exiting in June-July during a three-week-long U.S.-Iran ceasefire, when the Strait of Hormuz was mostly accessible to all traffic.

So far this month, Japanese ship owners and refineries have transferred larger volumes of crude via STS transfers outside the Middle East compared to similar transfers in other parts of the route to Japan, as per Kpler data cited by Bloomberg. The first STS involving Japan-bound cargoes in the Middle East occurred in August, and these transfers have been increasing since then, according to Kpler data.

Japanese refiners and ship owners remain highly cautious in Middle East voyages, hence, they are not attempting Hormuz transits into the Gulf. However, they seem to be willing to pick up more Middle East cargoes and optimize shipping costs through these STS transfers in the Gulf of Oman. Japan's Mitsui OSK Lines, the world's largest tanker operator, recently stated that it anticipates the shipping disruptions at the Strait of Hormuz to persist longer than initially expected, with no return to normalcy by the end of the year.