Tokyo — Escalating tensions in the Strait of Hormuz forced Asian refiners and shipowners to weigh alternative crude sources, deploy contingency plans and boost safety measures for navigation along Iran's coastal areas, industry sources and officials told S&P Global Platts Monday.
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Asian oil importers' moves intensified after Iran on Friday seized a UK chemical tanker and briefly detained a UK-owned VLCC in one of the world's most critical chokepoints, ratcheting up regional tensions and risks to oil shipments.
"We may look for more shipments from the US, the central Asia and other non-Middle East regions to avoid the risks over the Strait of Hormuz," said an official at SK Innovation, South Korea's biggest refiner. SK Innovation imports the bulk of its crude from Kuwait, Saudi Arabia and Iraq.
Japan's largest refiner JXTG Nippon Oil & Energy is considering crude procurements that do not transit through the Strait of Hormuz, while keeping its core supply from the Middle East, a spokesman said. Japanese refiners Idemitsu Kosan and Cosmo Oil were also placing their shipments under safety measures to ship crude oil through the Strait of Hormuz, company officials said Monday.
In India, an oil ministry official said: "Our refiners are unlikely to face any severe crisis due to the ongoing tension around the Strait of Hormuz as we have robust crude sourcing plans in place. We are open to source crude from anywhere including the US, provided the price is competitive."
Nearly 18 million b/d of oil transits from the Middle East to Asia via the Strait of Hormuz, according to the International Energy Agency.
Middle East tensions have increased crude purchasing costs for Chinese buyers, with freight and insurance premiums rising significantly, but a war in the region seems unlikely, a Beijing-based trading source with a national oil company said.
One of the key concerns is the increased presence of naval vessels in the Persian Gulf that could lead to slower vessel traffic, and even force shipping in convoys escorted by naval ships, leading to longer queues and higher voyage costs, ship brokers said.
The US Central Command said on Friday it was developing a multinational maritime effort to increase surveillance, ensure freedom of navigation and de-escalate tensions in international waters throughout the Persian Gulf, Strait of Hormuz, the Bab el-Mandeb Strait and the Gulf of Oman.
US officials were coordinating with partners in Europe, Asia, and the Middle East on the details for "Operation Sentinel" to protect vital shipping lanes, it added.
John Bolton, US National Security Advisor, was holding talks with the head of Japan's National Security Council, and foreign and defense ministers, Japan's Chief Cabinet Secretary Yoshihide Suga said Monday.
"We talked about all the issues that confront this from a national security point of view," Bolton told reporters after meeting with the Japanese foreign minister when asked about Iran.
Asian naval fleets are already eyeing tighter security for their oil supply.
In late June, the Indian Navy deployed in the Gulf of Oman to reassure Indian-flagged vessels, with naval ships Chennai and Sunayna undertaking maritime security operations with aerial surveillance, according to the Indian defense ministry
India's Directorate General for Shipping issued two advisories in June to all Indian-flagged vessels in the Strait of Hormuz and Persian Gulf to undertake protection measures.
Japan's Mitsui O.S.K. Lines, one of Japan's largest ship owners, is maintaining its advisory for its UK-related vessels to keep a distance from the Iranian coast, a company spokesman said Monday.
The UK government advised British ships to avoid the area "for an interim period" after Iran seized a UK chemical tanker and briefly detained a UK-owned VLCC in the Strait of Hormuz on Friday.
Under the notice first issued on July 11, MOL had advised its ships with UK-related flags to avoid navigating Iranian territorial waters, after one of its vessels-VLCC Pacific Voyager-had to be escorted by naval ships.
UK-related flags include Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, and Isle of Man.
NYK Line, another Japanese shipowner, has also put measures in place, including maximizing the speed of its ships passing through the Strait of Hormuz and setting up a task force after a Japanese-operated ship was attacked on June 13, a spokesman said.
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