Ramble On: Who Pays the Freight?

In September we borrowed a Led Zeppelin title to describe China’s crude stockpile, a levee holding backthe import shortfall created by the closure of Hormuz. One month on, the wateris still falling, Gulf crude has rambled on around the Strait, and the questionis what it will cost to rebuild.

China’s customs crudeimports were 9.03 mbpd in September, broadly flat on August, while refineryruns climbed to 13.99 mbpd, the highest since March. Hence China drew on itsstocks for the fourth time in five months, a net 0.60 mbpd after crude exports (Figure1). Of the 121.5 million barrels built by April, only 31 million remain. At theMay to September pace of 0.59 mbpd, that would be gone by late November.Arrivals picked up in October, but those cargoes were bought in the summer, andwith Brent around US$ 100 since early September, the refill is likely to slow.

From the Red Sea to the relay: two bypasses in six months The levee was needed because the Gulf’s main exit closed. Our data shows that crude loaded directly inside the Strait of Hormuz fell from about 14 mbpd in January and February to under 1 mbpd in September. China felt it first, with customs imports dropping from 12.0 mbpd in January and February to 7.1 mbpd in June, and the gap was met from tanks.

This story was originally published by Hellenic Shipping News. Read the full story at Hellenic Shipping News →