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After the Iran conflict, crude oil imports to Asia hit a high in September but remain weak

Even with the increase, imports of crude oils in Asia were still 13% lower than pre-conflict.

According to data compiled and analyzed by commodity analysts,?Kpler, the world's largest oil-consuming region, is on course to import 23,96 million barrels of crude oil per day in September. This represents an increase from August's 23.38 millions bpd, which was also the highest since February.

Kpler has recorded a trend of increasing crude imports in Asia since April, when they were at their lowest level in over 10 years.

The average oil imports for the three-month period ended in February was 27,55 million barrels per day.

On February 28, the United States and Israel began an aerial bombardment and missile campaign against Iran, resulting in Tehran's threat to shipping through the Strait of Hormuz. This narrow waterway carried around 20% of the global crude and refined product prior to the beginning of the war.

The strait is still contested, with Iran striking vessels from time to time and the US Navy trying to ensure the safe passage of tankers coming from Gulf exporters like Saudi Arabia, United Arab Emirates?and Iraq.

There has been some disagreement over the exact volume of oil that leaves the Strait of Hormuz, and Saudi Arabia's Yanbu Port on the Red Sea. US Energy Secretary Chris Wright claimed on several occasions that up to 15 million barrels per day (bpd) were leaving the Middle East. However, tanker tracking services reported lower levels.

The crude oil imports from the Middle East are primarily destined for?Asia, with smaller amounts going to Africa, Europe, and North America.

If Wright's claims are true, and 15 million barrels per day have left the Middle East, as he claimed in early August, this oil should have reached ports throughout Asia by the end of September.

According to Kpler's data, Asia's Middle East imports were 12,56 million bpd during September. This is up from 11,66 million in August, and over 5 million bpd higher than the low post-conflict of 7,12 million in April.

The September estimate, however, is still 3.53 million bpd less than the average of 16.09 million for the three months preceding the conflict.

While there are some facts that support Wright's claim, it is important to note that Asia still receives significantly less crude oil from the Middle East than before US President Donald Trump launched his war against Iran.

Wright claimed that 15 million barrels per day of oil were exported. However, even with this estimate, the exports are still 3 million barrels a day below pre-war levels.

The situation, in other words, is worse now than before the beginning of the conflict, despite all the efforts of US Navy to keep the Strait of Hormuz opened and the risks taken by oil companies and shippers, traders and crews to cross the Strait.

Saudi Arabia's East-West Oil Pipeline was closed recently after an alleged strike from Iraq. This will result in lower Middle East imports for October. However, they could recover by November once the pipeline is repaired and operating again.

The crude oil?flows to Asia, which are still restricted, continue to be reflected in the flows of refined products.

Like crude oil, Asia's imports for light and middle distillates also showed a slight recovery in September, but are still well below their pre-conflict level.

Kpler data shows that a total of 5.84 millions bpd light and middle distillates is expected to arrive in Asian ports by September. This is up from 5.25million bpd last month, but it's still over 1 million below the 7.06million bpd produced in the three-month period leading up to conflict.

Due to the weakness of refined fuel imports, diesel, jet fuel and gasoil prices remain near record highs compared with global crude benchmarks like Brent futures.

On 'Wednesday', the front-month contract traded around $99 per barrel in Asia, while Singapore gasoil – a building block of diesel – was $173.84 per barrel, and gasoline was $139.60.

Prior to the Iran War, the price premium of these fuels was typically between $10 and 20 per barrel.

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(source: Reuters)