Asian refiners boost African crude imports as tanker rates plunge 50%

Asian refiners are ramping up purchases of crude from Africa and Brazil as tanker shipping costs have fallen sharply from October’s record highs, making Atlantic Basin imports more affordable. Freight rates for major oil tankers have dropped by roughly 50% from last month’s peaks, shaving $5‑$10 per barrel off the cost of delivering crude to Asia. The lower rates have encouraged Chinese and South Korean refiners to secure cargoes from African producers such as Congo, Angola and Gabon, according to traders and shipping brokers.

Unipec, the trading arm of China’s Sinopec, bought two cargoes of Congolese Djeno crude at discounts of about $22 per barrel to dated Brent last week. The firm has also provisionally chartered two Suezmax tankers and one very large crude carrier (VLCC) to move West African oil to Asia between late November and early December. South Korea’s SK Energy has booked a Suezmax vessel to load Gabon crude for delivery to Ulsan in December. Both firms secured the shipping arrangements at rates below those recorded in October.

Freight costs spiked in October after Middle‑Eastern producers stepped up exports and used more vessels for ship‑to‑ship transfers outside the Strait of Hormuz to avoid attacks linked to the US‑Iran dispute. Chinese refiners also increased tanker demand after restrictions on Iranian crude imports pushed them toward alternative suppliers. As vessels completed deliveries and returned to the market, freight rates began to fall. The number of loaded VLCCs and Suezmax tankers in East Asia has risen by roughly 15% since early September, according to Vortexa.

Cheaper transport has also boosted the competitiveness of Angolan and Brazilian crudes. A Chinese refiner purchased one million barrels of Angola’s Plutonio grade for delivery in late December or early January at a premium of about $15 per barrel to Brent, down from a $20‑plus premium just two weeks earlier. Brazilian Tupi crude traded at premiums of $7‑$8 per barrel for January delivery, a sharp drop from the nearly $20 premium seen in October. The price shifts reflect lower shipping costs and softer demand in the previous month.

Asian buyers continue to source U.S. West Texas Intermediate crude using smaller Aframax tankers, which carry roughly 500,000‑700,000 barrels. Abu Dhabi’s Murban grade remains about $2 per barrel cheaper than WTI, while freight costs for larger vessels stay above normal levels despite the recent decline. Further African oil purchases will hinge on shipping rates, price differentials and Asian refinery demand.

Key Takeaways

Falling tanker freight rates lower the cost of transporting African crude to Asia, potentially boosting demand for the continent’s exports. A reduction of $5‑$10 per barrel can shift purchasing decisions for millions of barrels. For producers such as Angola, Congo, Gabon and Nigeria, cheaper transport improves competitiveness versus Middle‑East, Russian, Brazilian and U.S. supplies. However, higher export revenues also depend on benchmark prices and discounts. Recent examples include Unipec’s purchase of Congolese Djeno at a $22‑per‑barrel discount to Brent and Angola’s Plutonio premium easing. After an October freight spike driven by Strait of Hormuz disruptions and Chinese sourcing shifts, shipping capacity is rising and rates are falling, which could help African exporters keep volumes and expand sales to China and South Korea. Investors should watch Brent prices, tanker rates, Asian refinery demand, African grade discounts and export volumes; sustained demand could support shipments, but rates may rise again if vessel availability tightens.

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