Bad news from Hormuz has become almost routine by now. Nevertheless, there is a development that is important for logistics: China is beginning a permanent restructuring of its oil supply.
COSCO Shipping Energy Transportation and China Merchants Energy Shipping have not sent their tankers through the Strait of Hormuz or Bab al-Mandeb since the end of July. Before the Iran conflict, the two state-controlled shipping companies together transported approximately half of China's crude oil imports from the Middle East.
The oil therefore reaches Chinese tankers via alternative routes. Large vessels take on cargo through ship-to-ship transfers – directly from one ship to another – off Fujairah or off the coast of Oman. In June and July alone, such transfers involving Chinese or Hong Kong-flagged vessels amounted to over 600,000 barrels per day according to Kpler.
This comes at a cost. The daily rate for a VLCC on the Oman-China route was recently quoted at around 140,000 US dollars. Before the conflict, profits for such a tanker on comparable routes were significantly lower.
That such caution is justified is demonstrated by a new incident. According to Splash247, the Panamax bulker "Minoan Dignity," sailing under a Liberian flag, was hit by an unknown projectile in the engine room approximately five nautical miles off Oman. The Chief Engineer was killed.
In parallel, Iran is intensifying pressure on shipping. According to Fars, vessels are required to use an Iran-designated route, obtain permits, and pay service fees. However, the reported seizure of a UAE tanker near Qeshm has not yet been officially confirmed.
The situation thus remains far from normal. On Monday, according to Kpler, only six cargo vessels were recorded passing through Hormuz. VLCCs for crude oil and LNG tankers were not among them.