Experts warn that it could take up to two weeks before destroyers and military aircraft are available to provide military escorts for vessels transiting the Strait of Hormuz, while it is unclear whether the US Development Finance Corporation will be able to provide insurance after major international insurers withdrew cover for vessels in the region.
With the strait de facto closed in the meantime, the build-up of oil on vessels in the Arabian Gulf has surged, and refineries may shutter operations with no outlet for their refined product. 14 per cent of global CPP exports originated from the AG last year, so their closing would have huge ramifications for the product tanker markets.
Meanwhile, a VLCC fixture out of Yanbu to the Far East has been reported, and Saudi Aramco is reportedly offering Asian buyers cargoes out of the Red Sea port, to which it can transfer crude via its East-West pipeline. However, nameplate loading capacity out of Yanbu is limited, while it mostly loads Arab Light; Asian buyers prefer heavier grades.