Middle East LPG Ship-to-Ship Transfers Halted Amid Renewed Tensions

Middle East LPG ship-to-ship transfer activity, which have helped buyers avoid shipping risks around the Strait of Hormuz, has come to a halt since mid-July following renewed U.S.-Iran tensions, shipping sources said.

Middle East producers previously relied on STS transfers to facilitate cargo sales by transporting cargoes outside the high-risk Strait of Hormuz before transferring them to buyers’ vessels, OPIS reported earlier.

STS operations were typically conducted off Sohar, Oman, located outside the Strait of Hormuz.

However, shipbrokers said sellers have become increasingly hesitant to conduct STS operations following renewed U.S.-Iran tensions in July, citing heightened operational risks and concerns over crew safety.

“There are no traders working STS cargoes at the moment. There has been no STS discussion for the past two weeks,” an Indian shipbroker said.

Analysts said four Middle East LPG STS transfers were completed in July to date, with most involving cargoes loaded from Ruwais refinery.

The latest STS operation involved the Zakher vessel, which loaded at Ruwais on July 10 before transferring its cargo off Sohar on July 18, according to analysts citing Kpler data.

Other transfers included the Al Salam, which loaded at Ras Laffan on July 6 before conducting an STS transfer off Sikka on July 17. The Zakher earlier loaded at Ruwais on July 2 before transferring its cargo off Sohar on July 6, and the Seabus also loaded at Ruwais on July 1 before conducting an STS transfer off Mundra on July 17.

Traders said Middle East LPG export alternatives have also become increasingly limited, with Houthi attacks in the Red Sea continuing to disrupt loadings at Saudi Aramco’s Yanbu terminal.

Currently, Kuwait Petroleum Corp. or KPC is one of the few Middle East suppliers continuing to market cargoes, issuing DES sell tenders despite the disruptions.

KPC’s latest tender, which closed Monday offering a 44,000 metric ton evenly split LPG cargo for Aug. 1-20 delivery into the Singapore-Japan range, was awarded to a Western oil major, sources said. The cargo traded at $220s/mt premium to the August CP on a Chiba basis, but the final discharge port was Huizhou in South China.

—Reporting by Cheryl Lee, clee@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com