Kuwait is offering to sell its crude to refiners in Asia for the first time since the Iran war started, the latest indication of rising oil flows through the Strait of Hormuz.
At least 4 million barrels of the nation’s main export grade, carried on two very large crude carriers, are being offered to refiners in at least China and South Korea, traders familiar with the matter said, asking not to be identified as they’re not authorized to speak to the media.
The offers add to evidence that Hormuz flows are starting to open up — a trend that has coincided with increased US coordination of transits. Persian Gulf producers have increasingly been able to send tankers out, despite Tehran’s threat to shipping in the strait. Still, vessels have largely passed through the waterway with their transponders turned off, or going dark, to avoid being targeted.
Oil from the region’s fifth-largest producer loads from deep inside the Persian Gulf, requiring tankers to run the Hormuz gauntlet to reach global markets. The United Arab Emirates has also been selling millions of barrels of oil from inside the Persian Gulf to refiners in Asia. Total energy flows from the region remain far below pre-war levels though.
Traders said that the oil is being offered directly by state-owned Kuwait Petroleum Corp. rather than an intermediary. The barrels in question have already exited the waterway and can be taken to ports in Asia promptly, they said, without elaborating on the sales terms.
KPC declined to comment.
The effective closure of the Strait of Hormuz has resulted in the worst supply disruption in history, with higher-sulfur barrels that are typical of the region all but cut off from refiners, especially in Asia, which have largely built their refining systems around supplies of such feedstock.
Bloomberg has reported that companies including Saudi Arabia’s Aramco Trading Co. and the UAE’s state oil company Adnoc are among firms that have moved crude cargoes through the strait using “dark” transits, with ships turning off their signals.
There’s been vessel activity around Kuwaiti ports recently. The supertankers Al Riqqa and Dar Salwa were last observed moored at Kuwait’s Mina Al Ahmadi terminal in late May and early June, respectively, before their satellite-tracking transponders stopped signaling, according to vessel-tracking data compiled by Bloomberg. Their current positions are unclear.
Among earlier voyages, the supertanker Universal Winner, carrying Kuwaiti crude to South Korea, transited the strait in May via what appeared to be a route approved by Iranian authorities. The Japan-linked Eneos Endeavor also crossed the chokepoint during the month carrying a cargo of Kuwaiti and Emirati crude. Traders said the earlier flows were likely done with the help of other trading intermediaries.
Ongoing disruptions to transponder transmissions continue to obscure vessel movements, raising the likelihood that current transit counts understate actual traffic levels.