Refiners can legally buy at least 19 million barrels of Russian crude held on 25 tankers in Asia under the one-month U.S. waiver allowing sales as Middle Eastern supply is choked.
The U.S. Treasury on Thursday moved to allow until April 11 purchases of Russian crude stuck in tankers in floating storage.
Some 30 tankers carrying Russian crude oil and petroleum products are in Asia currently, according to vessel-tracking data compiled by Bloomberg.
Of these tankers, 25 are laden with crude while the rest hold products, mostly naphtha, per the data Bloomberg has compiled.
The volumes freed up for sale are small, especially compared to how much supply is choked at the Strait of Hormuz.
Still, they can ease some immediate energy supply concerns in Asia. But the competition for the Russian supply in Asia will be fierce, especially between China and India, which have been the key Russian crude customers in the past four years.
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“Asia’s alternative crude supply sources are severely limited, with both China and India competing for Russian crude,” said Sushant Gupta, Research Director, Asia Pacific Refining and Oils at Wood Mackenzie.
China is better positioned to soak up any sanctioned, or previously sanctioned, supply.
Record volumes of nearly 40 million barrels of sanctioned Iranian, Russian, and Venezuelan crude were idling in floating storage on tankers near China earlier this week, according to Kpler data cited by Bloomberg on Monday.
Two-thirds of the crude volumes currently amassed near China – most of which from Iran, per Kpler estimates – sit on tankers anchored in the Yellow Sea, and the rest are in the South China Sea.
The U.S. waiver for Russian oil and the IEA-coordinated record release of stocks from reserves, 400 million barrels, would not go too far to cover the shortfall that is being created in the Middle East. Gulf producers have already shut in about 10 million barrels per day of oil output and cuts could deepen if the Strait of Hormuz blockage extends into months rather than weeks, analysts say.
By Tsvetana Paraskova for Oilprice.com
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