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OIL: Strait of Hormuz Block Unlikely but Would Disrupt China Imports: Vortexa

OIL
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A blockade of the Strait of Hormuz and loss of Iranian supply to China is unlikely but any missing barrels would be replaced by the next available discounted supply, with Russian crude being the most viable option, Vortexa said.

  • Any gap left by Russian crude for buyers outside China may be filled by Saudi-led OPEC countries.
  • China crude imports via the Strait of Hormuz were 4.2mb/d in January to September, or 43% of seaborne supply, including about 1.35mb/d of Iranian crude and condensate.
  • About 400kb/d of the Iranian oil demand from Chinese private refiners is estimated to be resilient and can be replaced by non-discounted barrels. The remaining 1mb/d is more price-sensitive and would likely result in refinery run cuts.
  • Iran’s Kharg port has seen a slowdown with only two VLCCs loaded between October 1-10, compared to an average of 1.1 per day in Jan-Sept.
  • Iranian oil in floating storage outside the Strait of Hormuz was 40mbbl as of Oct. 6.
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A blockade of the Strait of Hormuz and loss of Iranian supply to China is unlikely but any missing barrels would be replaced by the next available discounted supply, with Russian crude being the most viable option, Vortexa said.

  • Any gap left by Russian crude for buyers outside China may be filled by Saudi-led OPEC countries.
  • China crude imports via the Strait of Hormuz were 4.2mb/d in January to September, or 43% of seaborne supply, including about 1.35mb/d of Iranian crude and condensate.
  • About 400kb/d of the Iranian oil demand from Chinese private refiners is estimated to be resilient and can be replaced by non-discounted barrels. The remaining 1mb/d is more price-sensitive and would likely result in refinery run cuts.
  • Iran’s Kharg port has seen a slowdown with only two VLCCs loaded between October 1-10, compared to an average of 1.1 per day in Jan-Sept.
  • Iranian oil in floating storage outside the Strait of Hormuz was 40mbbl as of Oct. 6.