Mangalore Refinery becomes first Indian refiner to demand avoidance of both Strait of Hormuz and Red Sea
Mangalore Refinery and Petrochemicals Ltd. (MRPL) has become the first Indian refiner to ask crude oil suppliers to avoid both strategic sea routes, the Strait of Hormuz and the Red Sea, in a spot crude oil bid.
This information is given in the context of continued instability in the Middle East, threatening maritime security and the global oil supply chain. MRPL has included this clause in its spot bid for up to 1 million barrels of crude oil, with expected delivery from August 25 to September 6.
Historic inquiry from Indian oil refiner
According to a report from Business Standard, this is the first time an Indian refiner has made such a request in a spot crude oil bid. In particular, MRPL clearly states that theOil loading or transportation of crude oil through the Red Sea or Strait of Hormuz should be avoided.
This shows the severity of the maritime security situation in this area, forcing oil importers to change their purchasing strategies. MRPL also said it will maintain these routing restrictions in future spot bids if the situation in West Asia does not improve.
The context of instability in the Middle East
MRPL's decision comes just a week after the Middle East region saw disruptions on both key oil shipping routes. Houthi forces have targeted ships operating in the Red Sea after declaring a blockade on Saudi Arabia's exports. Meanwhile, tanker traffic through the Strait of Hormuz remains below normal levels despite the suspension of US and Iranian military attacks.
Fluctuations in this area have directly affected global oil transportation activities, forcing companies to seek alternative routes or accept higher risks when transporting oil.
Data on tanker traffic through strategic routes
| Route | Current status | Ship traffic | Trend |
|---|---|---|---|
| Bab el-Mandeb Strait | Near multi-month lows | Only 11 cargo ships passed through the blockage on Sunday | Reduce |
| Strait of Hormuz | Lower than normal | Details have not been announced | Not recovered yet |
Impact on oil transportation activities
According to reports, only 11 cargo ships, including seven oil tankers, passed through the Bab el-Mandeb Strait choke point on Sunday. Of these, two super crudes (VLCCs) are moving to Saudi Arabia's Yanbu export port to load oil. Maritime intelligence company Windward also reported that tankers staying at Yanbu port had switched to "AIS-dark" operations (automatic identification system off) when anchored at the port.
This change in shipping activity showsincreased level of risk faced by oil companieswhen operating in the Middle East region. Turning off automatic identification systems may be a way to avoid being tracked or attacked.
Impact on oil prices
Brent crude oil prices fell sharply on Monday to $88 per barrel in early morning trading after Washington and Tehran called off military attacks. However, tanker traffic through both the Bab el-Mandeb Strait and the Strait of Hormuz has not fully recovered.
The contrast between falling oil prices and the unstable shipping situation shows that the market is reacting to a variety of factors, including expectations of easing political tensions and concerns about actual supply.
Summary of current situation
- MRPL is the first Indian refiner to ask to avoid both the Hormuz and Red Sea routes
- The maritime security situation in the Middle East remains unstable
- Tanker traffic through strategic routes remains low
- Oil prices decreased but did not fully reflect supply risks
- MRPL intends to maintain routing restrictions going forward
Conclude
MRPL's decision marks an important turning point in the Indian oil industry, reflecting the severity of the maritime security situation in the Middle East. This could also be a sign that other refiners will soon follow suit, especially if the situation in this region does not improve in the near future.
Disruptions in oil transportation through strategic routes not only affect oil prices but also have a profound impact on the global economy, as crude oil remains the world's main source of energy. Countries and companies will have to continue to seek alternative solutions to ensure energy security in an increasingly complex geopolitical context.