The Asian crude market is witnessing a fervent scramble for cargoes as Middle Eastern supply tightens. With buyers accelerating their purchases, regional oil prices are climbing rapidly, and the pressure of supply constraints is now squarely reflected in the pricing.

On September 5th, reports citing several unnamed traders indicated that demand for Middle Eastern crude from Asian refiners remains exceptionally strong, driving a sharp increase in key benchmark prices. The UAE's Murban futures are currently trading at $106.10 per barrel, while DME Oman crude, destined for the Asian market, is quoted at $99.18 per barrel, inching ever closer to the psychological $100 mark.

The persistent standoff in the Middle East, combined with continued disruptions in the Strait of Hormuz, and Saudi Arabia's oil exports dropping to their lowest level since 2017, are all contributing to the strain. Furthermore, some cargo deliveries have been deferred from August to September or even October, intensifying the scramble among Asian buyers and exacerbating the supply squeeze.

Asian Refiners Ramp Up Purchases, Intensifying Competition for Alternative Supplies

According to the reports, major refining entities such as Indian Oil, alongside refineries in South Korea and Japan, are emerging as the primary drivers of this surge in Middle Eastern crude procurement.

Meanwhile, the volume of crude transported through the Strait of Hormuz remains significantly below normal levels. Over the past week, the daily average flow has been only around six to eight million barrels. Data from ship-tracking firms Kpler and Vortexa show that Saudi export volumes have also slipped to their lowest point since 2017.

With supply tightening, Asian buyers are actively expanding their search for alternative sources. While buyers in countries like India are increasing imports from Brazil, Canada, and Argentina, they are also boosting their intake of Russian crude.

Competition for Russia's ESPO crude has been particularly fierce, with premiums for relevant cargoes reaching record highs. This indicates that with traditional supply channels hindered, Asian refineries are engaged in a more intense battle for the limited substitute supplies available.