(Bloomberg) -- An oil refinery jointly owned by OPEC+ members Oman and Kuwait is running at full capacity, just as a shift in trade flows to avoid the Red Sea sends traders scrambling for fuel.

The 230,000 barrel-a-day Duqm refinery is producing mainly diesel and jet fuel and selling them to countries as far away as the US and Brazil, the project’s Chief Executive Officer David Bird said in an interview this week ahead of its official inauguration. Its cargoes are avoiding the Red Sea, where Houthi militants have menaced global shipping.

The refinery’s location on Oman’s Arabian Sea coast gives it direct access to the Indian Ocean and is outside the region’s Strait of Hormuz and Red Sea shipping flash points. Its operators are looking to use that position as an alternative route for some Middle Eastern supplies to reach global markets, and are planning to boost storage capacity to hold tens of millions of barrels.

“There’s a lot of strategic potential,” Bird said.

Global shipping and energy markets have been roiled by a spate of attacks in the Red Sea on commercial cargo vessels and tankers by Iran-backed Houthis in Yemen. That’s forcing ships to take longer routes between Europe and the Middle East and Asia, adding costs and delays. The big concern for oil markets would be a potential conflict obstructing Hormuz, through which about a fifth of global oil supplies pass daily.

Oman’s state-run energy company OQ SAOC, owns the refinery in an equal joint venture with Kuwait’s state oil company. The refinery goes by the brand OQ8, combining the Omani company’s name with Kuwait’s international brand, Q8. 

The Duqm refinery is using Omani and Kuwaiti crude brought to the facility by tanker. Eventually, the refinery has the option to use other crudes, like those from Iraq, Saudi Arabia or the United Arab Emirates, if that proves more profitable, Bird said.

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