Gulf naphtha exports to Asia recover through transfers outside Hormuz

Naphtha exports from the UAE and Kuwait to Asia have recovered as suppliers use ship-to-ship transfers outside the Strait of Hormuz to work around disruption caused by regional conflict. Cracker Feedstocks wire (Bing News), carrying a report from Inspenet, said the arrangements were restoring supplies to petrochemical buyers in South Korea and Japan.

ADNOC and Kuwait Petroleum Corp. exported approximately 1.6 million tonnes during August and September, equivalent to about 14 million barrels, according to the report. That compares with roughly 700,000 tonnes in March and April, when Gulf trading routes were severely disrupted. The UAE accounted for most of the recovery: trade data attributed to Reuters put ADNOC Maritime International Chartering’s loadings at about 1.5 million tonnes across 25 vessels for transfers off Sohar, Oman, during August and September.

The arrangement brings naphtha from different UAE locations into Fujairah before cargoes are transferred offshore to ships serving Asian markets without needing to pass through Hormuz on that onward voyage. The report said supplies could include re-exports from Iraq and cargoes from Ruwais and Hamriyah, alongside product moved by road from other UAE ports. However, increased transfer activity off Sohar and western India has tightened availability of some marine equipment, prompting certain sellers to look for other transfer locations.

Kuwait’s recovery has been slower. KPC restarted spot offers to Japan on delivered ex-ship terms in late June following a three-month pause. Some cargoes scheduled for early September delivery reportedly commanded premiums reaching $45 per tonne over Japanese benchmarks. By contrast, QatarEnergy offered up to 75,000 tonnes for loading at Ras Laffan, while a previously sold cargo reportedly took a discount of around $100 per tonne against Japanese benchmarks amid buyers’ reluctance to bear Hormuz transit risk.

The renewed Gulf flows have also supported Asian steam crackers, which process naphtha into petrochemical building blocks including ethylene and propylene. Industry sources cited in the report placed operating rates in South Korea and Japan above 70% in August and September, against approximately 68% in March and April. The recovery illustrates how alternative transfer arrangements can preserve supply during maritime disruption, while adding logistical complexity and changing the cost of moving cargoes.