North America's crude shipments are shifting towards the Asia-Pacific to compensate for the loss of supply from the de facto closure of the strait of Hormuz, and markets are showing the strain in the form of record-high prices and surging freight rates.
The shock wave from the Middle East disruption has reached crude export terminals from Texas to Alaska, prompting buyers to seek replacement barrels and tightening supply.
On the US Gulf coast, deepwater Mars crude surged to a six-year high premium to WTI CMA Nymex as overseas refiners scrambled to replace Middle Eastern cargoes now cut off by the effective shutdown of the Hormuz chokepoint, which carried around 277,000 b/d of mostly medium sour Mideast Gulf crude to the US Gulf coast from November 2025 to February 2026, according to analytics platform Vortexa.
US light sweet WTI has emerged as a potential substitute for Abu Dhabi's light sour Murban at Asia Pacific refineries. A Japanese refiner recently purchased 2mn bl of WTI for June arrival in a deal concluded after the US-Iran conflict escalated.
US west coast delivered prices for medium sour Alaska North Slope (ANS) crude also hit record highs this week as Asia-Pacific buying tightened supply on the US west coast.
Asia-Pacific refiners are seeking alternatives to Middle Eastern grades as the closure of Hormuz effectively halts flows from the region. ANS is one of the more readily available medium sour spot grades in the Pacific basin, and this additional demand is further constraining west coast availability.
Elevated freight costs are also supporting west coast delivered prices. A fleet of US flag tankers typically moves ANS to California and Washington under Jones Act requirements and post Exxon Valdez oil spill regulations. Some of these vessels may now be employed on trans-Pacific voyages because of limited Suezmax availability in the region, tightening local tanker supply and pushing freight costs higher.
But soaring freight rates may curb the appeal of US crude. VLCC rates for US Gulf coast loadings to China climbed to about $14/bl on a WTI basis — nearly double week on week — reaching the highest level since Argus began assessing the route in 2012.
By John Cordner
