- Oil Prices Drop as Iran Shows No Intent to Block Strait of Hormuz.
- China, Japan, South Korea Confident in Crude Supply Stability.
- Asian Imports Unaffected as Refiners Monitor Middle East Risks.
Major refiners in North Asia have confirmed that the logistics for Middle Eastern sour crude shipments are right on track. Refinery feedstock managers and analysts throughout the region are feeling optimistic, believing that neither Iran nor Israel will jeopardise East Asia’s energy security or neutrality, reports S&P Global.
Oil Prices Drop as Strait of Hormuz Risks Ease
In a surprising turn, benchmark oil prices took a nosedive overnight, fueled by indications that Iran isn’t planning to obstruct the Strait of Hormuz. Sources from refineries and analysts in South Korea, China, and Japan pointed out on June 24 that this newfound perception has played a key role in stabilising market sentiment.
“There is nothing to gain [for Iran] from blocking the Strait of Hormuz, but a lot to lose by doing so,” said a feedstock and refining margin strategist at a state-run refiner based in Beijing.
East Asia’s Strategic Importance Keeps Crude Flows Steady
With China, Japan, and South Korea highly dependent on Middle Eastern sour crude, any disruptions would significantly affect their economies. However, sources in the region remain confident that both Iran and Israel are unlikely to escalate tensions to the point of threatening Asia’s energy supplies. “At this time, we are able to procure the necessary crude oil without any issues,” said a spokesperson at ENEOS, Japan’s top refiner.
The company also confirmed it is diversifying supply sources based on economic viability, stability, and compatibility with its refining systems, though Middle Eastern grades remain central.
South Korea Reports Normal Tanker Operations
In Seoul, the Korea Petroleum Association confirmed there have been no disruptions to crude tanker operations between the Persian Gulf and South Korea. The Ministry of Trade, Industry, and Energy also stated that both oil and LNG imports remain unaffected.
“All Middle Eastern crude cargoes purchased by local refiners are operating normally,” the ministry added.
Japan is gearing up for possible stockpiling
Right now, Japanese refiners are smoothly receiving crude oil, but at least three major companies, including ENEOS, are thinking about boosting their emergency reserves by anywhere from 5 million to 40 million barrels of crude, just in case there are any future disruptions.
China is confident about supply stability
Chinese trading firms and refiners are pretty sure that Iran won’t jeopardise its own export routes or mess with the flow of Middle Eastern crude to Asia. Their confidence stems from Iran’s economic interests and its long-standing trading ties with Asian countries.
Historic connections to Iranian crude
Before international sanctions came into play, Iranian crude and condensate were vital parts of the feedstock supplies for Asia. Back in 2017, South Korea imported a whopping 148 million barrels of crude and condensate from Iran, making it one of the top three buyers.
Japan also relied significantly on Iranian supplies: In 2017, “Japan received an average of 172,216 b/d” of crude oil from Iran, according to the Ministry of Economy, Trade and Industry. Popular grades like South Pars condensate, Iranian light crude, and Soroosh were regularly used in Japanese refineries before sanctions were imposed.
Did you subscribe to our daily Newsletter?
It’s Free Click here to Subscribe!
Source: S&P Global
