In one of the first instances of an oil tanker transporting Southeast Asia-bound crude through the Suez Canal following the Israel-Hamas ceasefire agreement, trade is gradually picking up, according to S&P Global Commodities at Sea and market participants Jan. 23.
The restoration of normal shipments through the Suez Canal is expected to happen sooner rather than later. At least one tanker has already passed through with Singapore-bound crude, and market participants said this will soon become a more frequent trend.
The Singapore-bound Neptune I is currently sailing south of the Gulf of Suez after passing through the Suez Canal, with an estimated arrival in Singapore on Feb. 8, according to CAS as of around 0900 UTC (0900 GMT).
The Panama-flagged and 2004-built Neptune I Aframax tanker is operated by Greece's Sea Trade Marine, according to CAS.
The LPG carrier Rayyan Gas, operated by Mphasis Marine Solutions FZE, is sailing southward through the Red Sea after transiting the Suez Canal and is estimated to arrive in Khor Fakkan in the UAE on Feb. 1, according to CAS.
The VLCC Ghazal, operated by Saudi shipping company Bahri, is also sailing southward through the Red Sea after loading a crude cargo in Yanbu and is estimated to arrive in Onsan, South Korea, on Feb. 15, according to CAS.
"It's nothing out of the ordinary ... A regular light sour crude supply from the parent company Aramco," said a feedstock management source at South Korean refiner S-Oil based in Onsan.
S-Oil, which is 63.4% held by Aramco Overseas, a subsidiary of Saudi Aramco, runs three crude distillation units -- No. 1 with 90,000 b/d, No. 2 with 240,000 b/d and No. 3 with 250,000 b/d, as well as a condensate fractionation unit with a capacity of 89,000 b/d, which brings its total refining capacity to 669,000 b/d in Onsan.
However, Asian refiners, particularly in South Korea and Thailand, remain hesitant to import Mediterranean crudes, especially CPC Blend, due to ongoing security concerns regarding tanker passage through the Red Sea amid geopolitical tensions. The recent Israel-Hamas ceasefire has not alleviated fears of potential attacks on ships, leading to high shipping insurance costs and a lack of confidence in safe transit, refinery sources told S&P Global Energy previously.
Consequently, the crude must take the longer and more expensive Cape of Good Hope route, rendering it economically unviable. As a result, South Korea's CPC Blend imports have plummeted by 63% in the latter half of 2024 compared with the previous year, while Thai refineries have largely turned away from this crude due to its limited role in their feedstock strategies.
Platts, part of Energy, assessed CPC Blend on a CIF Augusta basis at a discount of $3.7/b to the Dated Brent strip on Jan. 22. The discount has averaged $1.84/b so far in January, compared with an average discount of 88 cents/b in December 2024.
