According to WPB, two of China’s largest state-controlled tanker operators are no longer treating the Strait of Hormuz and Bab el-Mandeb as routine passages for their oil fleets. Since late July 2026, COSCO Shipping Energy Transportation and China Merchants Energy Shipping, or CMES, have kept their tankers away from both Middle Eastern chokepoints and increasingly positioned vessels to collect crude outside the Gulf, particularly around Fujairah in the United Arab Emirates and waters near Omani ports. The shift goes beyond another short-term reaction to maritime attacks. It shows that one of Asia’s largest energy buyers is beginning to redesign the logistics of obtaining Middle Eastern oil around vessel exposure rather than assuming that conventional loading routes will remain commercially usable.
The scale of the companies involved makes the change especially important. COSCO Shipping Energy Transportation and CMES together control more than 100 very large crude carriers, each typically capable of carrying about 2 million barrels of oil. Before the Iran war began in February 2026, the two state-controlled operators handled roughly half of China’s Middle Eastern crude imports, according to shipping-market estimates. China imported an average of about 4.9 million barrels per day of Middle Eastern crude excluding sanctioned Iranian supply in 2025, placing the two companies at the center of one of the world’s largest long-haul tanker trades. Their withdrawal from high-risk passages is therefore materially different from a single independent owner refusing one voyage.
Evidence of the new logistics model is already visible outside the Gulf. Ship-to-ship transfers involving China- and Hong Kong-owned vessels in the Gulf of Oman exceeded 600,000 barrels per day during June and July, while comparable activity was essentially absent in April and May and remained below 30,000 barrels per day during each of the first two months of 2026. Four COSCO-operated VLCCs and one CMES vessel loaded crude through STS transfers at Fujairah during July. From August through mid-September, about a dozen supertankers controlled by each company are scheduled to load outside the Gulf, mainly at Fujairah and at or near Omani ports, meaning roughly two dozen Chinese state-linked VLCCs are already being positioned around a system that avoids sending the receiving vessel deep into the Gulf.
The economics help explain why such an arrangement can work despite the extra operational complexity. On August 14, daily freight for an Oman-to-China VLCC voyage was assessed at approximately $140,000, while one shipping executive estimated the daily margin at close to $110,000. Before the conflict, profit on a comparable voyage was roughly $30,000 to $40,000 per day. The current freight market therefore offers a strong financial reward to owners that position vessels on the lower-risk side of the disrupted region and avoid direct exposure to the most dangerous passages.
For the bitumen market, however, the crucial point is not that crude-oil STS operations can simply be copied. A VLCC carrying 2 million barrels of crude is operationally very different from a specialized heated bitumen tanker. Crude can be transferred between suitable tankers offshore through established STS procedures, while bulk bitumen must be maintained at appropriate temperatures and requires compatible heated tanks, pipelines and handling systems. The fact that Chinese crude buyers can receive oil outside Hormuz therefore does not prove that Iranian, Iraqi, Kuwaiti, Bahraini or other Gulf bitumen can immediately be transferred through the same network.
The significance for bitumen lies instead in what China’s tanker strategy says about buyer behavior. Chinese state-linked importers are effectively showing that origin price alone is no longer enough to determine whether a Middle Eastern cargo is commercially attractive. A barrel that requires the buyer’s own vessel to enter a high-risk zone may be less attractive than a more expensive barrel available at an external transfer point with lower operational exposure. The same principle can increasingly influence bitumen trade, where the ability to move the product reliably may become as important as the nominal price at the refinery gate.
In a normal market, a buyer comparing Gulf bitumen cargoes may begin with an FOB quotation at the producer’s loading terminal and then add freight, insurance and transit time to calculate CFR or another delivered basis. That structure becomes less reliable when shipowners refuse to enter the loading area or demand a large risk premium to do so. Under those conditions, the nominal FOB price can lose part of its commercial usefulness because the decisive question becomes whether the product can be moved to a location where acceptable tonnage is actually willing to collect it. This is one reason the strategic importance of Fujairah is increasing.
Fujairah sits outside the Strait of Hormuz on the UAE’s eastern coast and is connected to Abu Dhabi’s producing system through a crude-oil pipeline capable of moving roughly 1.5 million to 1.8 million barrels per day. During the 2026 disruption, the port became one of the UAE’s principal alternatives to terminals inside the Gulf, while crude exports through Fujairah increased sharply after the conflict began. Its storage, blending and transfer infrastructure also allowed it to take on a larger role in regional petroleum logistics. Major terminal facilities already provide services including petroleum storage, blending, break-bulk, consolidation, pipeline transfers and ship-to-ship operations.
That infrastructure does not mean Fujairah is already a ready-made replacement for Gulf bitumen terminals. Finished bitumen cannot move through the Abu Dhabi crude pipeline simply because the pipeline reaches Fujairah, and not every petroleum tank or berth can handle paving-grade material. A meaningful bitumen gateway would require dedicated heated storage, insulated pipelines or road-transfer systems, suitable loading arms, quality segregation and access to specialized bitumen tankers. Fujairah should therefore be viewed as a commercially attractive direction for future diversification rather than proof that Gulf bitumen has already been rerouted there at scale.
Oman presents a similar possibility. Chinese crude tankers are increasingly collecting cargo at or near Omani ports because those locations can be reached without entering the Persian Gulf through Hormuz. Oman’s long coastline also provides strategic options that producers located behind the strait do not have. However, crude geography and finished-bitumen infrastructure remain two different issues. For Oman to become a major redistribution point for third-country bitumen, the market would still need adequate heated storage, suitable handling capacity, product segregation and transfer arrangements that can operate at commercially acceptable costs.
The strongest evidence that this broader model is gaining traction comes from crude trading itself. Saudi Arabia has begun offering Asian refiners Arab Medium and Arab Heavy cargoes through ship-to-ship transfers off Fujairah, while some Saudi crude is also again being loaded from terminals inside Hormuz. Between August 12 and August 16, three VLCCs loaded approximately 2 million barrels each from Juaymah and Ras Tanura, and additional tankers were expected to load later in August. The coexistence of traditional Gulf loadings and external transfer arrangements shows that the region is no longer operating under one uniform logistics model.
Some cargoes are still moving through conventional Gulf terminals, while others are being transferred outside Hormuz. Some shipowners are willing to make the passage, while major Chinese state operators are not. The result is a fragmented shipping market in which cargo origin, vessel ownership, insurer acceptance and loading location can create very different freight and risk costs for otherwise similar petroleum products. For bitumen traders, that fragmentation deserves particular attention because the pool of specialized vessels is much smaller than the global crude-tanker fleet.
The crude market can absorb part of a change in owner behavior through its broad fleet of VLCCs, Suezmaxes and Aframaxes. Bulk bitumen has far fewer substitutes because heated cargoes depend on a more specialized vessel pool. A relatively small reduction in the number of owners willing to enter the Gulf can therefore have a disproportionate effect on vessel availability, waiting time and charter rates for bitumen. Importantly, such pressure does not require Hormuz to be formally closed; the passage only needs to become commercially unattractive for enough owners.
A route may remain technically open while becoming economically difficult to use. If an owner adds a large risk premium, an insurer tightens terms, crew acceptance becomes more difficult or the vessel must wait for an acceptable transit window, the delivered cost can rise even when the refinery’s FOB quotation remains unchanged. China’s decision is especially important because it shows buyer-side risk management rather than only disruption among Gulf sellers. Much of the debate around Hormuz has focused on whether producers can export, but the Chinese strategy introduces an equally important question: even if the seller can load, is the buyer willing to send its preferred vessel to collect the cargo?
That distinction can reshape commercial negotiations. A Gulf supplier able to make a cargo available outside Hormuz may eventually command a different commercial value from another seller offering the same material only from a terminal inside the Gulf. Buyers may increasingly distinguish between the nominal FOB price at origin and an executable loading point where suitable vessels are actually available. Under severe shipping uncertainty, this could also strengthen the role of CFR pricing because some buyers may prefer the seller to arrange the vessel rather than assume the transport risk themselves.
Sellers accepting CFR exposure would, however, have to price freight volatility, insurance and vessel availability into the cargo. The gap between FOB and CFR could therefore remain significantly wider than traders were accustomed to before the conflict. For Asian buyers, this can change the comparison between Gulf bitumen and supply from Singapore, South Korea or Malaysia even when the underlying product prices do not move sharply. A Gulf 60/70 cargo may look cheaper at origin but lose that advantage once vessel premiums, insurance and uncertainty are included, while a more expensive cargo from a reliable origin may ultimately offer the lower risk-adjusted delivered cost.
This is especially relevant for China because its own state-controlled tanker companies are demonstrating how much commercial value they now place on avoiding uncertain passages. Their behavior also offers a second lesson beyond Hormuz, because COSCO and CMES have been avoiding Bab el-Mandeb as well since late July. Earlier, two China-linked VLCCs carrying Saudi crude successfully exited the Red Sea through Bab el-Mandeb on July 23, but subsequent deterioration in security changed fleet behavior. One COSCO-operated vessel later altered its route and traveled empty through the Suez Canal to load Saudi oil at Egypt’s Mediterranean port of Sidi Kerir rather than maintaining its original Red Sea exposure.
This shows that China is not simply replacing one dangerous chokepoint with another. Large state-linked operators are trying to redesign voyages around several correlated maritime risks at the same time. For bitumen moving toward Europe or the Mediterranean, that matters because a cargo that successfully exits Hormuz may still face Bab el-Mandeb if it continues through the Red Sea and Suez. Routing around the Cape of Good Hope avoids the second chokepoint but adds distance, fuel consumption, vessel days, financing costs and potentially additional heating requirements for bulk bitumen.
For Asian destinations such as China, India and Southeast Asia, Fujairah and Omani loading points are more strategically attractive because eastbound cargoes can move directly into the Arabian Sea and Indian Ocean without entering Hormuz or Bab el-Mandeb. This geographical advantage could continue increasing the commercial relevance of eastern UAE and Omani logistics even if political conditions eventually improve. At the same time, the market should avoid assuming that these locations will automatically replace Bandar Abbas, Basra, Kuwait, Bahrain or other established bitumen-loading origins. Creating an alternative crude route is much easier when pipelines already exist; creating an alternative bitumen supply chain requires the finished product itself to reach the external hub.
For Iranian and Iraqi bitumen, that limitation is especially important. A crude pipeline cannot carry finished paving-grade bitumen, so any serious outside-Hormuz alternative would require dedicated road, rail, coastal shipping or specialized transfer arrangements appropriate for the physical form of the product. Packaged bitumen may have greater flexibility because drums and jumbo bags can move by truck or container without the continuous heating required for bulk cargo. If eastern UAE or Omani ports become more important container and general-cargo gateways, packaged bitumen could potentially adapt faster than bulk bitumen, while bulk cargoes would require much more specialized infrastructure.
The most important development, therefore, is not that Fujairah has suddenly become a Chinese bitumen terminal. There is no evidence supporting such a conclusion. What matters is that China’s largest state-linked tanker operators have shown a willingness to reorganize one of the world’s biggest crude-import systems rather than expose their vessels to two unstable chokepoints. Once a buyer of that scale begins organizing procurement around external loading points, the commercial value of storage, transfer capacity and accessible loading locations outside the risk zone rises across the broader petroleum market.
For bitumen, several indicators now deserve close attention. Traders should watch whether more petroleum cargoes are quoted at Fujairah or Omani transfer points, whether dedicated heated-storage capacity outside Hormuz attracts greater commercial interest, whether specialized bitumen owners begin applying materially different freight rates for inside-Gulf and outside-Gulf loadings, and whether buyers increasingly request CFR rather than FOB terms. These signals would show whether the crude-market restructuring is beginning to influence the commercial architecture of finished bitumen trade.
The larger change may ultimately be as much about market psychology as physical infrastructure. Before the crisis, entering Hormuz was treated as a normal part of a Gulf voyage, and freight calculations were built around that assumption. In the emerging market, safe access itself is becoming a service with a price. China’s state-tanker strategy makes that shift visible because the buyer is now actively paying to reorganize its supply chain around access and risk rather than simply accepting the traditional route.
If this model persists, the most competitive suppliers may not necessarily be those offering the lowest refinery price. The advantage could shift toward sellers able to place product at the safest and most accessible loading point with confirmed vessels, predictable insurance and reliable delivery conditions. For Asian bitumen, that could gradually move the center of commercial gravity away from the refinery gate and toward logistics hubs located outside the region’s most vulnerable chokepoints.
Fujairah and Oman are not yet replacements for the Gulf’s traditional bitumen-loading network, and there is no evidence that such a transition has already occurred. But in a market where some of China’s most important tanker operators no longer want to cross Hormuz or Bab el-Mandeb, location outside the chokepoint is becoming an increasingly valuable commercial asset. If that preference becomes structural, the next stage of Asian bitumen competition may be shaped not only by who has the cheapest product, but by who can place it where the buyer’s vessel is actually willing to go.
By WPB
News, Bitumen, China, COSCO, CMES, Strait of Hormuz, Bab el-Mandeb, Fujairah, Ship-to-Ship Transfer, Bitumen Shipping
