Tensions in the Middle East are rising to the point where US President Donald Trump has even started talking about who pays for the protection of the Strait of Hormuz, a shipping corridor through which one third of all seaborne petroleum passes.
This article takes a look at which nations get their oil supplies from the Persian Gulf – and from exactly where in the region they load those barrels.
Trump made the point that Asian buyers rely on shipments through Hormuz far more than the US does. And on that point, he’s right (albeit some of his figures were off the mark). Only a small proportion of the crude and condensate, a form of light oil extracted from gas fields, that leaves the region now heads for American ports. In the past three months, it accounted for about 800,000 barrels a day, or just 6% of the total shipments from the Persian Gulf ports in Saudi Arabia, Iraq, Kuwait, the United Arab Emirates and Qatar.
Most of the nations’ oil exports head east to China, India, Japan, South Korea and a host of other Asian countries. Together Asian buyers hoover up more than 80% of all the crude and condensate shipped through Hormuz. So they’re an easy target for Trump to say they should do more to protect shipping through the waterway.
Buyers Beware
Attention on Hormuz has intensified since the head of Iran’s Revolutionary Guard Corps’ naval force threatened in April to close the waterway if Iran’s oil exports were halted. Two subsequent attacks on oil tankers near the UAE port of Fujairah, which the US has pinned on Iran or its proxies, and the downing by Iran of a US drone, have raised the threat level and boosted the price of oil and the cost of shipping it out of the Persian Gulf. Insurance costs for tankers have also gone through the roof.
But Hormuz is not the only place that tensions could flare. One obvious area where a hot conflict could erupt is around the Iranian oil export terminal at Kharg Island in the northern Gulf, potentially dragging in nearby facilities.
A conflict in the northern part of the Persian Gulf could have an impact on shipping to and from the oil export terminals in Kuwait and southern Iraq. The biggest lifters of crude from these terminals are China and India, which took 1.24 million barrels a day and 1.14 million respectively over the three months from March through May, according to tanker tracking data monitored by Bloomberg. But buyers in the West would not be immune to the consequences. The U.S. and a host of European countries, including Greece, Italy and Spain, together with shipments to the trading hub at Rotterdam, collectively accounted for 1.27 million barrels a day.
At Risk
Similar volumes of crude are shipped to China and India from the Central Persian Gulf terminals in Saudi Arabia and Qatar. Here, though, Japan and South Korea would also be hit hard by any disruption to shipments, much more than they would by disruptions further north. In the central Gulf it is a host of smaller Asian buyers, including Taiwan and Thailand, as well as the eastern trading hub at Singapore, that would also feel the pinch, with thinner volumes heading westwards.
The US still imports a significant volume of crude from Saudi Arabia, with almost 500,000 barrels a day heading to its ports from the kingdom over the past three months.
Most of the vessels calling at Saudi Arabia’s Persian Gulf terminals, along with those heading to and from Iraq and Kuwait, pass close to the Iranian coastline for much of their voyage, avoiding the congested waters above the North gas field off Qatar and its extension into Iranian waters as the South Pars field. Any incident in the waters off the Iranian terminal at Assaluyeh, or further south to the Strait of Hormuz, could affect exports from both northern and central terminals in the Persian Gulf.
In the south, a little over 20% of the UAE’s crude and condensate exports are shipped from the oil terminal at Fujairah, outside the Strait of Hormuz. The remainder are loaded from half a dozen terminals inside the Persian Gulf and pass through the strait to reach the Indian Ocean. Japan is the biggest lifter of oil from these terminals, taking around 30% of all shipments, or some 580,000 barrels a day. The US rarely imports crude or condensate from the UAE.
The bottom line is that, as Trump says, the US’s role as a Middle East oil buyer has diminished sharply over the past decade thanks to the rise of shale oil.
But whether it’s wise to suggest America in any way step back from securing the region is a whole different discussion.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
