With Hormuz barrels trapped, Asian refiners are buying US crude as Russia expands in India; a Malaysian cargo bound for California and longer tanker blackouts show trade routes shifting quickly.
Economics & Markets··Morning
Asia turns to US crude as Russia takes a record Indian share
Middle Eastern barrels cannot leave the Strait of Hormuz, so north Asian refiners stepped up purchases of US crude as a substitute, and traders told Reuters that at least four Asia-based refiners bought US cargoes in the week alone. Tanker traffic through the strait, measured by transits with positioning transponders switched on, slumped during the same week. Tight fuel markets and high refining margins encouraged runs: South Korea's GS Caltex bought 2 million barrels of Mars crude from Shell for November delivery at a premium of 13 to 14 dollars over the October Dubai benchmark. Separately, Russia shipped about 2.47 million barrels a day of crude to India in July, a 62.4 per cent jump from a year earlier and 50.83 per cent of India's total oil imports according to trade sources cited by Reuters, the highest share Russian crude has taken of those imports. July volumes fell short of June's average of 2.6 million barrels a day; Kpler put July at 2.45 million barrels a day, while the United Arab Emirates shipped 617,000 barrels a day and Saudi Arabia 586,000 over the same month.[2], [1]
First Malaysian fuel cargo for the US West Coast since 2023
Trade flows also reversed in refined products. The tanker Solomon Sea left the PRefChem refinery operated by Petronas with more than 540,000 barrels of low-sulfur straight-run fuel oil and is due in the United States in early September, MarineTraffic data show, heading to a West Coast refinery. The load left the 300,000-barrel-a-day plant in Pengerang for the United States. US refiners take such feedstock from Mexico and Venezuela, but a tight fuel market and rising refining margins widened the arbitrage enough to pull in Malaysian supply. Low-sulfur straight-run fuel oil is a favoured input for making gasoline and diesel or for blending low-sulfur marine fuel. The cargo therefore illustrates how a closed Hormuz window and strained product balances can rearrange not only crude grades into Asia but also intermediate fuel oil onto the US West Coast.[3]
Dark sailing lengthens at the chokepoints as tariff risk lingers
Visibility around the chokepoints deteriorated as routing choices multiplied. Ship-tracking data monitored by Bloomberg show more tankers sailing with positioning transponders switched off at the Middle East's two critical passages, with the silence stretching from a few hours to a week or more. The practice has spread from the Strait of Hormuz to Bab el-Mandeb, where the Houthis are targeting Saudi-linked ships and oil cargoes leaving the Red Sea port of Yanbu. At the end of July the supertanker Romania Prosperity vanished from radar off Fujairah in the Gulf of Oman and reappeared nearby 10 days later; tracking services could not verify whether it still carried the same cargo. Against that backdrop, a US Senate bill that would impose 100 per cent tariffs on countries that buy Russian crude still awaits approval in the House of Representatives, adding a policy risk to India's already elevated dependence on Russian barrels. The week therefore left Asian crude sourcing, reverse product trade to California and longer dark-sailing intervals as linked signs that oil logistics are being redrawn under the Hormuz closure.[4], [1]
