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Business Times
5 days ago
- Business
- Business Times
Asia's reliance on Middle Eastern oil laid bare by Iran attacks
[PARIS] Oil buyers and traders across Asia are watching the escalation of a conflict around Iran with bated breath, as the top importing region braces for the impact of any disruption of exports from the Persian Gulf. Asia buys more than four-fifths of all the crude produced in the Middle East, and 90 per cent of that goes through the Strait of Hormuz, according to data from Kpler. Here are three key concerns for the Asian market as the conflict expands: The Iran-China link China, the world's largest oil refiner, gets about 14 per cent of its crude from Iran, Kpler data show. Actual flows are likely higher, with some imports from the Islamic Republic masked as shipments from not just Malaysia, but also the United Arab Emirates and Oman, in order to circumvent US sanctions. While China's larger state-owned processors seek to avoid breaching the bans, the country does not as a whole recognize unilateral US sanctions. And these discounted flows are vital for a hard-pressed private refining sector. There's growing concern those shipments could be disrupted. That has boosted demand for crude that can load on the Indian Ocean side of the Strait, including Abu Dhabi's Murban and Omani crude. Other grades that may benefit from any threat to Iranian flows are Russian ESPO, which loads from the Far East port of Kozmino, as well as Angolan varieties. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Iran's fuel exports Iran does not just ship crude – it is also a sizable exporter of fuel oil, selling mostly high-sulfur varieties used for shipping or as refinery feedstocks. Much of that supply eventually finds its way into ship-refueling hubs including Fujairah in the UAE, Singapore and Malaysia. The so-called straight-run fuel oil that can replace crude is typically exported to the relatively simple, low-margin processors in China known as teapots. Iran also has a lot of natural gas – sharing one of the world's largest deposits with Qatar. While the Islamic Republic uses most of that domestically, it sells by-products including liquefied petroleum gas and condensates internationally. China's giant plastics sector relies on Iran for almost a quarter of its imports of LPG, which can be used for cooking and heating but also processed into petrochemicals used as plastic building blocks. That relationship has only intensified after flows from the US, traditionally China's largest supplier, collapsed because of trade conflicts earlier this year. 'If there is a complete stoppage of Iranian LPG material or even, say, a halving of the average intake to China, China has few alternatives of substance,' said Samantha Hartke, head of market analysis for the Americas at Vortexa. Iran's influence on key shipping routes The vast majority of Asia's imports come through the Strait of Hormuz, making this waterway a focus for oil merchants. While Iran may choose not to block the conduit, it's also able to threaten the safety of navigation through the Red Sea – the shortest route between Asia and Europe – using proxies such as Yemen's Houthis. About 9 per cent of global seaborne trade normally passes through the Bab el-Mandeb chokepoint, or more than US$2 trillion worth of goods a year. That may affect Asia's supply from Russia, which has turned to markets in the East after being increasingly shunned by the US and traditional buyers in Europe because of its invasion of Ukraine in 2022. Ships carrying those massive volumes – ranging from flagship Urals crude to naphtha – must decide whether they continue to risk the Red Sea route, or face weeks of delays by going around South Africa instead. BLOOMBERG
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Business Standard
5 days ago
- Business
- Business Standard
Asia's oil lifeline at risk as Iran conflict threatens key trade routes
Oil buyers and traders across Asia are watching the escalation of a conflict around Iran with bated breath, as the top importing region braces for the impact of any disruption of exports from the Persian Gulf. Asia buys more than four-fifths of all the crude produced in the Middle East, and 90 per cent of that goes through the Strait of Hormuz, according to data from Kpler SAS. Here are three key concerns for the Asian market as the conflict expands: The Iran-China link China, the world's largest oil refiner, gets about 14 per cent of its crude from Iran, Kpler data show. Actual flows are likely higher, with some imports from the Islamic Republic masked as shipments from not just Malaysia, but also the United Arab Emirates and Oman, in order to circumvent US sanctions. While China's larger state-owned processors seek to avoid breaching the bans, the country doesn't as a whole recognize unilateral US sanctions. And these discounted flows are vital for a hard-pressed private refining sector. There's growing concern those shipments could be disrupted. That has boosted demand for crude that can load on the Indian Ocean side of the Strait, including Abu Dhabi's Murban and Omani crude. Other grades that may benefit from any threat to Iranian flows are Russian ESPO, which loads from the Far East port of Kozmino, as well as Angolan varieties. Iran's fuel exports Much of that supply eventually finds its way into ship-refueling hubs including Fujairah in the UAE, Singapore and Malaysia. The so-called straight-run fuel oil that can replace crude is typically exported to the relatively simple, low-margin processors in China known as teapots. Iran also has a lot of natural gas — sharing one of the world's largest deposits with Qatar. While the Islamic Republic uses most of that domestically, it sells by-products including liquefied petroleum gas and condensates internationally. China's giant plastics sector relies on Iran for almost a quarter of its imports of LPG, which can be used for cooking and heating but also processed into petrochemicals used as plastic building blocks. That relationship has only intensified after flows from the US, traditionally China's largest supplier, collapsed because of trade conflicts earlier this year. 'If there is a complete stoppage of Iranian LPG material or even, say, a halving of the average intake to China, China has few alternatives of substance,' said Samantha Hartke, head of market analysis for the Americas at Vortexa Ltd. Iran's influence on key shipping routes The vast majority of Asia's imports come through the Strait of Hormuz, making this waterway a focus for oil merchants. While Iran may choose not to block the conduit, it's also able to threaten the safety of navigation through the Red Sea — the shortest route between Asia and Europe — using proxies such as Yemen's Houthis. About 9 per cent of global seaborne trade normally passes through the Bab el-Mandeb chokepoint, or more than $2 trillion worth of goods a year. That may affect Asia's supply from Russia, which has turned to markets in the East after being increasingly shunned by the US and traditional buyers in Europe because of its invasion of Ukraine in 2022. Ships carrying those massive volumes — ranging from flagship Urals crude to naphtha — must decide whether they continue to risk the Red Sea route, or face weeks of delays by going around South Africa instead.
Time of India
5 days ago
- Business
- Time of India
From crude to LPG: How the Iran conflict could choke Asia's energy lifelines
Oil buyers and traders across Asia are watching the escalation of a conflict around Iran with bated breath, as the top importing region braces for the impact of any disruption of exports from the Persian Gulf. Asia buys more than four-fifths of all the crude produced in the Middle East, and 90% of that goes through the Strait of Hormuz , according to data from Kpler SAS. Here are three key concerns for the Asian market as the conflict expands: The Iran-China Link China, the world's largest oil refiner, gets about 14% of its crude from Iran, Kpler data show. Actual flows are likely higher, with some imports from the Islamic Republic masked as shipments from not just Malaysia, but also the United Arab Emirates and Oman, in order to circumvent US sanctions. While China's larger state-owned processors seek to avoid breaching the bans, the country doesn't as a whole recognize unilateral US sanctions. And these discounted flows are vital for a hard-pressed private refining sector. Live Events Bloomberg There's growing concern those shipments could be disrupted. That has boosted demand for crude that can load on the Indian Ocean side of the Strait, including Abu Dhabi's Murban and Omani crude. Other grades that may benefit from any threat to Iranian flows are Russian ESPO, which loads from the Far East port of Kozmino, as well as Angolan varieties. Iran's Fuel Exports Iran doesn't just ship crude — it is also a sizable exporter of fuel oil, selling mostly high-sulfur varieties used for shipping or as refinery feedstocks. Much of that supply eventually finds its way into ship-refueling hubs including Fujairah in the UAE, Singapore and Malaysia. The so-called straight-run fuel oil that can replace crude is typically exported to the relatively simple, low-margin processors in China known as teapots. Iran also has a lot of natural gas — sharing one of the world's largest deposits with Qatar. While the Islamic Republic uses most of that domestically, it sells by-products including liquefied petroleum gas and condensates internationally. Bloomberg China's giant plastics sector relies on Iran for almost a quarter of its imports of LPG, which can be used for cooking and heating but also processed into petrochemicals used as plastic building blocks. That relationship has only intensified after flows from the US, traditionally China's largest supplier, collapsed because of trade conflicts earlier this year. 'If there is a complete stoppage of Iranian LPG material or even, say, a halving of the average intake to China, China has few alternatives of substance,' said Samantha Hartke, head of market analysis for the Americas at Vortexa Ltd. Iran's Influence on Key Shipping Routes The vast majority of Asia's imports come through the Strait of Hormuz, making this waterway a focus for oil merchants. While Iran may choose not to block the conduit, it's also able to threaten the safety of navigation through the Red Sea — the shortest route between Asia and Europe — using proxies such as Yemen's Houthis. About 9% of global seaborne trade normally passes through the Bab el-Mandeb chokepoint, or more than $2 trillion worth of goods a year. That may affect Asia's supply from Russia, which has turned to markets in the East after being increasingly shunned by the US and traditional buyers in Europe because of its invasion of Ukraine in 2022. Ships carrying those massive volumes — ranging from flagship Urals crude to naphtha — must decide whether they continue to risk the Red Sea route, or face weeks of delays by going around South Africa instead.
Business Times
27-05-2025
- Business
- Business Times
Chinese plastics buyers resist switch back to US propane despite pause in trade war
[SINGAPORE] Chinese plastics factories left without US raw material when trade relations collapsed earlier this year are holding back from returning to many of those suppliers despite a pause in hostilities, underscoring the difficulty in restoring commercial ties between the world's two largest economies. Beijing's retaliation to US President Donald Trump's so-called reciprocal tariffs effectively made American energy sales to China unviable, including the propane used to make plastics. Last year, before the new administration took the helm, almost 60 per cent of Chinese imports of the liquefied petroleum gas (LPG) came from the US. Buyers won a reprieve earlier this month after duties were dramatically scaled back for 90 days, but they remain wary of resuming purchases in case the tariff war flares up again, traders said. Chinese propane dehydrogenation (PDH) units that turn the gas into building blocks for plastics were still securing cargoes from Canada and the Arab Gulf as at last week, said the traders, who asked not to be identified discussing commercially sensitive matters. As more and more buyers in the world's largest plastics industry become comfortable with the replacement supplies, deals are being concluded at a narrower premium to benchmark prices, they said. That could indicate a willingness among sellers to capture Chinese business for the longer term. Last week, a Chinese buyer bought an Arab Gulf cargo of propane at a premium of US$30 a tonne above the Saudi contract price for July, the traders said. That compares to as much as US$70 earlier in the month, when the frantic rush for alternatives was at its peak. The most recently announced Saudi benchmark was set in April at about US$600 a tonne. Buyers also continue to scoop up LPG shipments from the Arab Gulf comprising propane and butane, albeit at a discount last week of at least US$50 per tonne, they said. The addition of butane makes the cargoes less attractive to PDH units. After factoring in the current tariff of 10 per cent, margins for a Chinese PDH running US propane 'are not lucrative' and stand at around US$20 a tonne, said Samantha Hartke, head of market analysis for the Americas at Vortexa, a cargo-tracking and analytics firm. 'Volumes aren't going to move' from America to China, unless the price of propane falls in the US, or the price of substitute supplies arriving in East Asia rises, she said. BLOOMBERG
