Saudi Arabia is reducing crude shipments to Europe while offering additional volumes to Asian refiners through ship-to-ship transfers off Oman’s Sohar port after drone attacks damaged its key East-West oil pipeline, according to trading sources and people familiar with the matter.
The attacks forced Saudi Arabia to shut the East-West pipeline on September 11, disrupting a major export route linking the Kingdom’s eastern oil fields to the Red Sea port of Yanbu. The pipeline, which can transport around 4 million barrels per day (mmbl/d), has provided Saudi Arabia with an alternative route to the Strait of Hormuz amid reduced tanker traffic through the waterway.
Oil trading and shipping sources said Saudi Arabia had informed European customers that some crude cargoes scheduled for loading in September would be canceled, while loadings at Yanbu have been suspended.
At the same time, state oil company Saudi Aramco has offered Asian term buyers its flagship Arab Light grade, as well as Arab Medium and Arab Heavy, for loading through ship-to-ship transfers off Sohar, which is located outside the Strait of Hormuz, sources said.
The offers indicate that Aramco is moving additional crude out of the Gulf for onward transfer beyond the waterway. In recent weeks, the company has made at least two similar offers of Arab Medium and Arab Heavy to Asian buyers.
Over the past week, Saudi Arabia has also doubled its daily crude loadings at the Ras Tanura and Juaymah terminals inside the Gulf to around two very large crude carriers, equivalent to approximately 4 million barrels, according to satellite tracking by consultancy Energy Aspects.
The increase in Saudi crude loadings and volumes offered through alternative routes comes as other Gulf producers also seek to export more oil outside the Strait of Hormuz. Producers have secured vessels to shuttle supplies through the waterway, in some cases with their tracking signals switched off, before transferring cargoes for onward delivery.
Such arrangements have enabled Gulf producers to export between 7 and 9 mmbl/d, representing around 30% to 40% of pre-war volumes, despite sharply reduced traffic through the Strait of Hormuz.
Saudi Arabia has blamed the drone attacks on Iraqi armed groups. The disruption to the East-West pipeline has added pressure on the Kingdom’s export logistics, forcing it to rely more heavily on terminals inside the Gulf and alternative shipping arrangements to maintain crude supplies to international markets.