Japan Buys Argentine Medanito for First Time as Iran War Rewires Asian Crude Flows
Argentine crude exports to Asia hit a record 35,000 bpd this year as Japanese and South Korean refiners seek discounted alternatives to disrupted Gulf barrels.
Japanese refiners Eneos Holdings and Taiyo Oil have purchased Argentine Medanito crude in recent weeks, the first time either company has taken the grade, traders said. The trade reflects how far Asian procurement teams have had to reach since the Iran war began fracturing Gulf supply routes in late February.7
Argentine crude exports to Asia averaged a record 35,000 barrels a day through July this year, Argentinian government data show, more than five times the 2025 average. Processors in Japan, South Korea and China have all lifted the grade in recent weeks as they scramble for supply outside the Gulf.7
The economics help. Medanito sells at a discount of around $1 to $2 a barrel compared with U.S. crude, according to traders, at a time when ICE Brent crude front-month was trading near $90.73 a barrel as of Monday (2026-08-31). For refiners already stretched by the prolonged Hormuz disruption, that spread is meaningful.7
The Gulf supplied between 40% and 80% of seaborne crude imports for China, India, Japan and South Korea before hostilities began, according to The Economist. In 2025, Asia absorbed 87% of the crude and 86% of the LNG transiting the Strait of Hormuz. When the strait effectively closed, the region's importers faced a supply hole with few ready alternatives. Iraq was forced to shut in more than half its oil production during the closure, compounding the loss of Iranian barrels.1,4
Crude arrivals into Asia did recover from the worst of the disruption. Kpler estimated the region imported 22.18 million barrels a day in June, up from 20.35 million bpd in May and well above April's eight-year low of 18.77 million bpd. But June volumes remained far below the pre-conflict average of 26.76 million bpd recorded in the three months before the February 28 attack, leaving a supply deficit that spot markets have only partially closed.3
The first and most accessible source of replacement barrels was the United States. EIA data showed U.S. crude exports averaging 5.6 million barrels a day in April, 21% above the previous record set in December 2023. But a re-escalation in U.S.-Iran tensions during the week of July 13 (2026-07-13) halted an expected recovery in Hormuz flows, according to Rigzone, and pushed buyers to broaden their search further.5,6
Argentina's Medanito had largely been sold to the United States and Chile before this year's disruption. Total Argentine exports averaged 215,000 barrels a day across all destinations this year, Argentinian government data show. The 35,000 bpd flowing to Asia through July marks a significant shift in the barrel's commercial direction, though it remains small relative to Asia's overall import needs.7
For Japan, the Eneos and Taiyo purchases mark a particular departure. Neither refiner had previously bought the grade, traders said. South Korea and China moved earlier. The pattern suggests a widening circle of Asian buyers testing Argentine supply as a hedge against further Hormuz disruptions rather than a wholesale pivot away from established suppliers.7
ICE Brent crude front-month has gained roughly 40% since hostilities began in May, according to The Economist, with the market pricing in continued uncertainty over Gulf throughput. The war has also triggered fuel-switching across the power sector: Japan's coal-fired power supply rose 11.1% in April year-on-year while gas-fired generation dropped 12.9%, and South Korea saw coal-fired output surge 39.7% over the same month against 2025 levels, Reuters reported.1,2
The question for refiners and traders is whether Argentina can meaningfully scale its Asian sales. The country's total export base of 215,000 barrels a day is oriented mostly toward the United States and Chile, and redirecting volumes over longer trans-Pacific routes adds freight costs that could erode the grade's discount advantage. Argentine capacity cannot come close to substituting for Gulf volumes at the scale the region actually needs. If Hormuz flows recover and stabilise through the fourth quarter, the new Argentine trade relationships may prove brief. If they do not, Japanese refiners will be back in the spot market looking for more unfamiliar grades.7,1