Asian Refiners Turn to Argentina as Iran War Disrupts Oil Supply
Key Takeaways
- •Asian refiners in China, Japan, and South Korea have purchased Argentina's Medanito crude to offset Middle East supply losses from the Iran war, with at least one cargo loading in August.
- •Medanito crude, produced at the Vaca Muerta shale basin, is comparable in quality to U.S. West Texas Intermediate and is priced at a $1–$2 per barrel discount to WTI.
- •Medanito shipments travel around South America into the Pacific without passing through any chokepoint or canal, avoiding the Strait of Hormuz, Suez, and Panama routes.
- •Argentina did not export any oil until 2024, and its oil sales to Asia have risen sharply this year as Vaca Muerta's ramp-up turned the country into a crude exporter.
- •Other South American producers, including Brazil and Venezuela, have also attracted Asian refiners seeking to reduce reliance on Middle Eastern oil.
Asian crude oil importers, including China, Japan, and South Korea, have turned to buying oil from as far away as Argentina to offset supply losses from the Middle East, anonymous traders with knowledge of the purchases told Bloomberg on Monday.
Before the Iran war, refiners in Asia relied on the Middle East for a large share of their term supplies — the region supplies more than half of Asia's crude imports, and about a fifth of global oil consumption passes through the Strait of Hormuz, making it one of the world's most critical energy chokepoints. Asian buyers are now scouring the global crude market for alternative barrels that do not need to pass through the Strait of Hormuz or other geopolitical hotspots, or that would not take a month longer to deliver from the Red Sea via the Mediterranean and around the Cape of Good Hope in Africa.
Argentina fits the bill, and several refiners in Asia have already bought cargoes from the South American producer.
In recent weeks, refiners in Asia have purchased Argentina's Medanito crude, and at least one cargo of the grade — which is comparable to U.S. West Texas Intermediate — loaded earlier in August, according to Bloomberg's sources.
Medanito is produced at the Vaca Muerta shale basin, the heart of Argentina's oil boom, where oil and gas production has been rising in recent years. Vaca Muerta, located in Neuquén Province, is one of the world's largest shale oil and gas deposits, and its ramp-up has turned Argentina from a net importer of fuels into a crude exporter.
Argentina's oil sales to Asia have jumped this year compared with 2025 — and the country exported no oil at all until 2024 — according to Argentinian government data compiled by Bloomberg. For Argentina, the war-driven demand from Asia opens a new market for its rising shale output.
Argentina's Medanito crude travels to Asia around South America and into the Pacific, without passing through any chokepoint or canal, such as the Panama Canal or the Suez Canal. This chokepoint-free trade route has apparently boosted Asia's appetite for Argentinian oil, which is also close in quality to U.S. WTI — a grade that has itself become more popular in Asia since the Iran war broke out.
Medanito is being sold at a discount of $1–$2 per barrel versus WTI, the trade sources told Bloomberg.
Other South American producers, including Brazil and Venezuela, have also become popular among Asian refiners seeking to reduce the risk of over-reliance on Middle Eastern oil. The shift illustrates how a single regional conflict can reroute global crude flows, as buyers weigh not just price and quality but the security of shipping routes when sourcing barrels.
Source: OilPrice.com, based on reporting by Bloomberg. By Tsvetana Paraskova for Oilprice.com.
