Oil-hungry Asia turns back to Mideast in earnest as flows expand
This lessens the need for imports from alternative suppliers including the US
Asia's oil-dependent refiners are increasingly turning to Middle Eastern crude as flows from the region rebound following a period of conflict, reducing their reliance on alternative suppliers like the US. Refiners in Japan, China, and Thailand have ramped up or restarted purchases from the Middle East, including shipments that must traverse the contested Strait of Hormuz.
The UAE, Saudi Arabia, and Qatar are among the primary sources, with Saudi Arabia recently cutting official selling prices to a six-year low to attract Asian buyers. Global oil markets are showing signs of reverting to patterns seen before the US-Iran war, as refiners in Asia's largest importing region continue to prefer Middle Eastern cargoes.
Reduced prices and freight rates further contribute to this trend. Despite the war's impact on flows from Persian Gulf shippers, output from Saudi Arabia surged to one of its highest monthly levels in October. Meanwhile, major Middle Eastern producers have reduced term rates for Asian buyers to compete more aggressively for market share.
US crude deliveries to Asian refineries in November fell about 50% compared to the previous month, while China's crude imports hit a seven-month high in October, driven by Persian Gulf shipments, particularly from Iraq.
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