Asian markets are facing an increase in the cost of insuring alternative crude oil supplies amid disruptions in oil flows from the Middle East, as buyers turn to shipments from the Americas and Africa, which incur additional costs due to long shipping distances and high freight, insurance, and port fees.
According to an analysis published by the "Platts" platform of S&P Global Energy, supplies from distant regions, particularly the United States, Latin America, and Africa, do not provide a low-cost alternative for Asian buyers, despite the need to diversify oil sources.
Data from the Korea National Oil Corporation showed that South Korea, the largest Asian importer of U.S. crude oil, paid an average of $92.15 per barrel during the first seven months of the year for 148 million barrels imported from the Americas, compared to an average of $88.07 per barrel for 348 million barrels from Middle Eastern oil during the same period.
In light of these factors, Iraqi oil, especially Basra medium and heavy crude, may attract greater interest from Asian buyers, as it represents a geographically closer regional supply compared to shipments from the United States and the Americas.
Iraq’s geographic location and southern export routes help reduce maritime distances compared to shipments departing from the Atlantic Ocean, potentially giving Iraqi crude a relative advantage amid rising transportation and insurance costs.
However, Iraq's ability to capitalize on this opportunity will remain linked to maintaining stable exports and ensuring regular flows to Asian markets, alongside offering competitive prices amid rising costs of alternatives and changes in global shipping markets.