The Tamesis
With access to the Strait of Hormuz still uncertain due to the Iran war, Asia’s top fuel importers are rerouting ships to Saudi ports to avoid supply disruptions.
Tehran has blocked most shipping traffic in the Strait of Hormuz since last month in retaliation for U.S. and Israeli attacks on the country.
Asian countries have been hardest hit by the blockade due to their reliance on oil and gas from the Middle East, much of which passes through the key waterway.
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With the war showing little sign of ending and access to the Strait of Hormuz still uncertain, Asian countries that rely on imported fuel are looking for new avenues.
Taiwan said on Monday it would reroute ships carrying crude oil from Saudi Arabia’s Red Sea ports to avoid supply disruptions.
Official data shows that by 2025, Taiwan will rely on the Middle East for nearly 70% of its oil imports, of which Saudi Arabia will account for nearly 29%.
Other Middle Eastern sources include the United Arab Emirates, Qatar, Kuwait, Oman and Iraq. U.S. supply is slightly over 28%.
Zou Yuxin, deputy director of the Industrial Development Bureau of the Ministry of Economic Affairs, said, “We have worked hard to adjust routes to allow goods to depart from the Red Sea, or to make up the difference with spot purchases.”
“Of this adjustment, about 46% was resolved by changing the Red Sea export route and 54% was resolved by spot purchases,” Zou said, referring to oil exports disrupted by the conflict.
“Overall, as a result of these efforts, our strategic safety inventory now stands at more than 140 days.”
Tsou added that the government was “confident” that it would have sufficient LNG supplies by the end of June and would make up for the shortfall through the spot market.
Economy Minister Kong Ming-hsin said he had been contacted recently by “a major energy producer” and said it would “fully support” Taiwan’s LNG needs.
“He told us that they will fully support our gas needs and if we have any needs, we can let them know,” Kong said over the weekend.
“In addition, some countries have said that some countries have released strategic oil reserves, and if Taiwan needs it, they can also help coordinate,” he said.
South Korea also eyeing Saudi ports
Like Taiwan, South Korea will send five South Korean-flagged ships to the Saudi Arabian Red Sea port of Yanbu to help establish alternative oil supply routes to the Strait of Hormuz.
“South Korean-flagged ships need to be dispatched to other routes” to ensure crude oil supply for export routes that bypass the Strait of Hormuz, lawmaker Ahn Doe-gye told reporters after meeting with the Energy Ministry and other relevant agencies.
“We are pushing for the deployment of five South Korean-flagged ships to the Saudi Arabian port of Yanbu in the Red Sea region,” he said, without giving details.
He said envoys would also be sent to Saudi Arabia, Oman and Algeria to help secure additional crude supplies.
Like other Asian economies, South Korea relies heavily on energy imports, including through the Strait of Hormuz. The country relies on Middle Eastern crude oil for about 70% of its imports.
The situation prompted the government to propose a $17.2 billion supplementary budget to cushion the economic impact, with President Lee Jae-myung warning that the economy was effectively on a “wartime basis.”
The country’s energy ministry recently issued guidelines urging the public to conserve energy, including taking shorter showers and charging mobile phones during the day.
Seoul also implemented a fuel price cap, the first such measure since 1997.
Iran allows some ships to pass through Strait of Hormuz
The closure of the Strait of Hormuz has roiled global energy markets, sending oil prices soaring and raising growth and inflation risks in Asia.
However, since last month, Tehran has started allowing some ships to pass through the waterway. It said “non-hostile vessels” would be allowed to pass through the waterway if coordinated with Iranian authorities. Since then, at least one Pakistani tanker and six Indian tankers have successfully transited the waterway.
The momentum has continued this month, with a Japanese shipping company saying on Monday that an Indian-flagged oil tanker owned by its subsidiary had passed through the Strait of Hormuz and was en route to the South Asian country
A spokesman for Mitsui Merchant Marine Co., Ltd. told AFP that the LPG tanker Green Asha had crossed the strait. “The crew and cargo are safe,” she said.
This is the third Japanese-related ship to cross the strait.
On Saturday, the Indian government said the liquefied petroleum gas tanker Green Sanvi, owned by a Mitsui subsidiary, had safely passed through the strait. A day earlier, three oil tankers, including one jointly owned by Mitsui & Co., passed through the strait.
Mitsui & Co’s Sohar LNG ship is the first LNG tanker to cross the strait since March 1.
The few ships that have crossed the chokepoint since the outbreak of war in the Middle East have used an Iranian-approved route through the waters near Larak Island, a route dubbed the “Tehran toll” by leading shipping magazine Lloyd’s List.
Asian countries seek to address shortages
Experts say that while Asian countries have had some success in gaining access to crude oil and liquefied petroleum gas, the Iran war has had the most serious impact on their energy security.
South Korea, India, Myanmar, Thailand and the Philippines have taken various measures to address energy shortages, including increasing coal use to maintain energy security.
Meanwhile, Taiwan has tried to protect its consumers from the full impact of rising energy prices, adopting a mechanism to absorb 75% of fuel increases. It also froze gas prices for households and increased LNG prices for industrial users.
Taiwan said that electricity prices for large power consumers such as semiconductor manufacturers will rise by 41.6%.
Taiwan Airlines will also increase fuel surcharges on international flights by 157% from Tuesday.
Meanwhile, Sri Lanka has increased LPG prices by nearly 23%, saying supplies are sufficient to last until April.
- AFP, with additional editing and input by Vishakha Saxena
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