China's state shippers deploy oil tankers outside Gulf, avoid chokepoints, sources say

• The two shippers control more than 100 VLCCs (very large crude carriers) capable of carrying 2 million barrels each and previously transported roughly half of China's 4.9 million barrels per day of Middle Eastern crude imports
• Ship-to-ship transfers involving Chinese vessels in the Gulf of Oman surged to over 600,000 bpd in June-July 2026, up from zero in April-May and under 30,000 bpd in January-February
• Daily freight margins for Oman-China voyages have nearly tripled to approximately $110,000 per tanker from $30,000-$40,000 before the Iran war, driven by longer routes and heightened security risks

Summary

Key Development: Chinese state-owned shipping giants COSCO Shipping Energy Transportation and China Merchants Energy Shipping (CMES) have stopped sending oil tankers through the Strait of Hormuz and Bab al-Mandeb since late July due to escalating Middle East conflict.

Strategic Context: The two shippers control over 100 very large crude carriers (VLCCs), each capable of transporting 2 million barrels of oil, and previously handled approximately half of China's crude imports from the Middle East before the Iran war began in late February. China imported an average 4.9 million barrels per day from the Middle East last year (excluding sanctioned Iranian oil).

New Operations: Vessels are now loading oil outside the Gulf through ship-to-ship (STS) transfers at UAE's Fujairah and Omani ports. Kpler data shows STS volumes involving Chinese and Hong Kong-owned vessels surged to over 600,000 bpd in June-July 2026, up from zero in April-May and under 30,000 bpd in January-February.

Financial Impact: Daily freight rates have soared to $140,000 for the Oman-China route, generating approximately $110,000 in daily profit per tanker—nearly triple the pre-war profit margin of $30,000-$40,000. A shipping executive described the strategy as offering "low risk and good profits."

Timeline: Yemen's Houthis declared a maritime embargo against Saudi Arabia on July 20, while the Strait of Hormuz remains largely closed after a U.S.-Iran interim peace deal collapsed in June. Between August and mid-September, approximately two dozen COSCO and CMES supertankers are scheduled for loadings outside the Gulf, according to ship brokers.