Middle East oil flows to Asia are drying up, says Kpler's Matt Smith

Summary

• Traffic through the Strait of Hormuz remains minimal, with only a handful of vessels daily, primarily Iranian crude tankers, and no significant improvement over the past month.
• Speculation exists about ships paying tolls to Iran for safe passage, but Kpler's data suggests most non-Iranian traffic may be humanitarian cargos due to fuel scarcity.
• Saudi Arabia's East-West pipeline is at capacity, enabling up to 4.5 million barrels per day from Yanbu, but these flows must pass through the Bab el Mandeb strait.
• Bab el Mandeb is a key vulnerability, with Houthi attacks potentially cutting off ~4 million barrels per day of Saudi crude if geopolitical escalation occurs.
• Alternative shipping routes via Fujairah have been compromised by recent bombings, though some loadings continue.
• Rerouting Middle East crude to Asia via the Suez Canal or around Africa would add approximately four weeks to voyage times, exacerbating supply delays.
• LNG flows from Qatar to Asia have effectively ceased; final shipments are arriving with no follow-on cargoes, impacting South Korea, Thailand, and Taiwan.
• Asian refiners face dwindling crude supplies, leading to reduced refinery runs and potential domestic shortages of refined products like jet fuel, diesel, and gasoline.
• This supply crunch may disrupt exports, such as South Korea's jet fuel shipments to the US West Coast, and is already drawing down inventories in Japan.