Asian Refiners Double Down on U.S. Crude as Iranian Barrels Dry Up
Just 4 million unsold barrels remain near Malaysian waters as Iranian cargo prices hit multi-year highs and Asian buyers chase American supply.
Asian refiners are on course to nearly double their September purchases of U.S. crude from a month earlier, a surge that stands to squeeze domestic U.S. fuel makers as Americans already face record pump prices.7 The shift reflects the near-collapse of Iranian supply to the region: just 40 million barrels of crude remain in waters east of peninsular Malaysia — a key holding and transhipment area for Chinese and other Asian buyers — with only an estimated 4 million of those still unsold. Iranian cargo prices are close to the highest since the end of the last Trump administration, said Emma Li, lead China market analyst at analytics firm Vortexa.6
China's private refiners have been hit hardest. Those teapot refineries that long dominated purchases of sanctioned Iranian barrels now face a choice between paying record premiums for Iranian oil or switching to costlier supply from further afield.6
The pivot accelerated in the week of 2026-07-13, when U.S.-Iran tensions re-escalated and the expected recovery of Hormuz flows stalled. Asian buyers returned promptly to negotiating spot cargoes of U.S. crude.5
EIA figures for April, the most recent available, showed a 15% jump in total U.S. petroleum exports versus March, which had itself set the previous record, as the Hormuz crisis lifted demand for American barrels.5 Crude oil exports alone averaged 5.6 million bpd that month, up 21% above the record set in December 2023.5
Asia's overall crude imports recovered to about 22.18 million bpd in June, up from 20.35 million bpd in May, Kpler data showed.3 June arrivals were still well below the 26.76 million bpd average in the three months before the February 28 (2026-02-28) U.S.-Israeli attack on Iran, but far above the eight-year low of 18.77 million bpd recorded in April.3
China is limiting purchases despite holding ample reserves. Kpler tracked only 5.76 million bpd of Chinese seaborne arrivals in June, even as Beijing holds 1.3 billion barrels in strategic stocks, enough to cover a year of lost Gulf imports. Chinese authorities have nonetheless ordered major domestic refiners to suspend diesel and petrol exports.3,1
Refined product flows lag crude. Iraqi production remains more than half shut in, and Saudi Arabia is directing most crude exports through the East-West pipeline to the Red Sea port of Yanbu. The reopening of the Strait of Hormuz, through which as much as 20% of global crude and refined products moved before the conflict, should allow more crude to reach Asia in July, but product shortfalls will clear more slowly.4,3
Asian spot LNG prices have risen 62% since the start of the war, Reuters reported.2 Newcastle coal is up 13% over the same period.2 Japan's coal-fired power supply rose 11.1% in April, the fastest pace in at least a year, while gas-fired generation fell 12.9% to 16,447 gigawatt-hours; South Korean coal-fired output jumped 39.7% year-on-year that month, the biggest increase since August 2019, Korea Power Exchange data showed.2 Iranian retaliation has knocked out 17% of Qatar's LNG export capacity, adding supply pressure on top of Gulf disruptions.2
ICE Brent front-month settled at $95.99 per barrel as of 2026-09-04, with WTI at $91.38. Whether Beijing lifts its diesel and petrol export ban will be the clearest near-term signal of supply confidence. A resumption of Chinese product exports would indicate authorities believe supply has stabilised; continued suspension means the squeeze persists.6,3