Chinese state-owned shipping firms COSCO and CMES have stopped sending oil tankers through the Strait of Hormuz and Bab el-Mandeb. To avoid threats from Iranian forces and Houthi proxies, these companies are now utilizing ship-to-ship transfers in the Gulf of Oman to secure crude oil transport.
The 200 million barrel risk in the Strait of Hormuz
The scale of this operational shift is massive, as COSCO and CMES collectively operate more than 100 Very Large Crude Carriers (VLCCs).. According to Reuters reports, these vessels hold a combined capacity exceeding 200 million barrels of oil, making any disruption to their transit a significant blow to global energy logistics. the decision to halt passage through the Strait of Hormuz and Bab el-Mandeb followed consultations between the shipping giants and the government in Beijing regarding escalating regional risks.
This retreat is not a sudden impulse but a gradual withdrawal. As Reuters reported, CMES had already abandoned the Hormuz route entirely by late July. while the companies have not yet issued a formal public announcement, the move reflects a calculated effort to protect state assets from the increasing volatility caused by Houthi proxies in Yemen and Iranian military activity.
Fujairah's role in the July ship-to-ship pivot
To maintain the flow of oil without entering high-risk chokepoints, COSCO and CMES have adopted a strategy of ship-to-ship (STS) transfers in the Gulf of Oman . This method involves transferring crude from one vessel to another in waters that are beyond the immediate missiile reach of Iranian forces. In July, this strategy was put into practice off the UAE port of Fujairah, where four COSCO VLCCs and one CMES vessel successfully executed STS loading.
An unnamed Chinese shipping executive told Reuters that this shift has yielded positive results, citing both low risks and strong profitability. By loading crude in the Gulf of Oman and sailing directly to China, these carriers can bypass the most dangerous segments of the journey, ensuring that heavy Saudi crude reaches customers in China and Southeast Asia without the peril of military interception .
The divergence between Chinese caution and Saudi confidence
The cautious approach of COSCO and CMES stands in stark contrast to the stance of Saudi Arabia. While the Chinese firms are taking long detours to avoid conflict zones, Saudi Arabia has reportedly remained confident in its ability to navigate the Strait of Hormuz without facing Iranian attacks. This discrepancy highlights a growing divide in how regional powers and their primary customers perceive the actual level of threat in the Persian Gulf.
This shift is part of a broader trend in the global shipping industry toward flexible routing and risk mitigation. As geopolitical instability becomes a permanent fixture of maritime trade, the reliance on traditional chokepoints is being replaced by adaptive logistics. For the shipping industry,the cost of longer voyages is now viewed as a necessary insurance premium against the total loss of a VLCC.
Will the September expansion of STS transfers stabilize supply?
The industry is now watching to see if this alternative model can scale. Plans are already in place for September, with a dozen more vessels scheduled to carry out similar ship-to-ship transfers. However, several critical points remain unverified. It is still unclear whether the Chinese government will eventually formalize this policy or if it will remain a quiet, operational adjustment by state-run firms.
Furthermore, the source indicates that suppliers are already disappointed by the extended transit times, which disrupt the consistent timing required by Chinese refineries. whether the increased volume of STS transfers in September can offset these delays—or if the logistical friction will eventually force a return to the Strait of Hormuz—remains an open question.
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