Asia turns to U.S. crude as nations scramble for oil

ASIAN refiners are ramping up purchases of American crude, with shipments to the region expected to hit a 3-year high in April. Traders familiar with recent deals say the shift is driven by efforts to offset reduced flows from the Middle East.

Roughly 60 million barrels of U.S. crude are scheduled for loading to Asia next month, according to market sources. The surge reflects a broader scramble by refiners to secure alternative supplies, as disruptions around the Strait of Hormuz have effectively restricted exports from the Gulf, trapping a significant portion of regional output.

The rush for replacement barrels has pushed buying prices higher, with Asian refiners paying notable premiums above Dated Brent as they compete for non-Middle Eastern crude, Oilprice.com said.

Analysts note that U.S. Midland crude has become particularly attractive in Asia, remaining competitive against Abu Dhabi’s Murban grade amid ongoing constraints in Persian Gulf supply. The pricing advantage is expected to matter even more as refiners secure cargoes for May and June processing.

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Japan has emerged as a key buyer in the shift, increasing its intake of U.S. oil. Market data indicates that about 3 million barrels of Midland crude have already been booked for April delivery, with total U.S. imports by Japanese refiners potentially reaching record monthly levels.

While emergency stockpile releases from Japan and South Korea may ease immediate supply pressures, analysts say they are unlikely to fully replace lost Middle Eastern barrels, meaning import demand will remain strong.

With no quick resolution in sight for the supply disruption, Asian refiners are intensifying arbitrage buying from alternative regions, particularly the United States, according to market analysts.

Beyond U.S. crude, refiners across Asia are diversifying their sourcing. Thailand’s PTT has reportedly secured North Sea Forties and Angolan cargoes, while South Korea’s GS Caltex has purchased Kazakh CPC Blend shipments for April.

Chinese refiners are also stepping up procurement, ordering at least 9 million barrels of West African crude for April loading, in addition to ongoing purchases of Brazilian supply for both March and April.

Nations scramble for oil

The world’s quickest fallback against oil supply disruptions – crude held in floating storage – is being rapidly drained as buyers rush to secure cargoes already at sea, particularly those positioned outside the Strait of Hormuz.

Data from Vortexa, cited by Bloomberg, shows that volumes in floating storage have dropped sharply to roughly 78 million barrels this week, down from about 140 million barrels at the close of last year.

Since the outbreak of conflict in the Middle East, these offshore stockpiles have been shrinking at an estimated pace of 1.8 million barrels per day. The speed of this drawdown ranks among the fastest in recent years, underscoring how Asian buyers are prioritising crude that can be delivered almost immediately.

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A temporary U.S. waiver allowing purchases of Russian crude transported via tankers is aiding India’s return to the market. Prior to the conflict, Indian refiners had scaled back such imports for weeks under U.S. pressure.

Now, India is outcompeting China for Russian cargoes, with some vessels reportedly diverting mid-journey from Chinese routes to Indian destinations. The shift reflects both the U.S. waiver and the supply shock stemming from the Middle East crisis, which has pushed Indian buyers back toward Russian oil.

The U.S. has already taken steps to release an estimated 130 million barrels of Russian oil cargoes at sea and may consider a similar move involving around 140 million barrels of Iranian crude in floating storage.

However, analysts caution that even if Iranian oil is cleared for trade and draws interest beyond Chinese buyers, transactions could remain complicated due to existing sanctions, particularly those tied to banking and insurance systems.