Hormuz alternative oil routes inadequate to cope with demand

Some 350 oil tankers, some loaded and some empty, are currently stranded in the area. Read more at straitstimes.com.

PARIS – Iran’s threats against oil tankers transiting the Strait of Hormuz – a chokepoint through which some 20 per cent of global exports pass in peacetime – has forced countries in the region to seek alternative routes.

But analysts warn those routes are not yet sufficient to deal fully with global oil demand.

“Saudi Arabia and the UAE can reroute some crude output to terminals outside the Gulf,” the International Energy Agency stated in its latest monthly oil report, saying that this can “help offset lost crude flows via Hormuz”.

But data intelligence firm Kpler warns that alternative export routes “remain insufficient, with record loadings from Fujairah (UAE) and Yanbu (Saudi Arabia) still leaving effective Middle Eastern exports at only about one-third of normal levels.”

Kpler says Asian refiners are expected to step up purchases of long-haul cargoes from the Atlantic Basin with no quick reopening of Strait of Hormuz traffic likely.

Almost 20 million barrels per day (mb/d), or about 20 per cent of global oil consumption, typically pass through the Strait of Hormuz, mostly bound for China, India, South Korea and Japan.