Argentina Becomes Unlikely New Oil Supplier to Asian Refiners

Asian refiners are turning to Argentina as a new source of crude oil due to supply disruptions from the Middle East following the Iran war. Refiners in China, Japan, and South Korea have traditionally relied on Middle Eastern oil, but now they're looking for alternative barrels that don't pass through geopolitical hotspots like the Strait of Hormuz.

The Strait of Hormuz is a critical chokepoint for global oil trade, and with tensions rising between Iran and the West, Asian refiners are seeking to minimize their reliance on Middle Eastern oil. Argentina's Medanito crude, produced at the Vaca Muerta shale basin, fits the bill as it can travel through South America without passing through any major chokepoints.

Argentina's oil sales in Asia have increased significantly this year, with exports jumping from 2025 and no exports at all until 2024. The Asian appetite for Argentinian oil is driven by its quality, which is comparable to US West Texas Intermediate (WTI) crude. Medanito crude is being sold at a discount of $1-$2 per barrel versus WTI.