Saudi Arabia Boosts Crude Sales Following Pipeline Shutdown
Saudi Arabia is increasing immediate sales of crude oil from locations outside the Strait of Hormuz after its East-West pipeline was shut down, cutting off oil flow to the Red Sea.
This week, Saudi Aramco sold around 20 million barrels to Asian refiners, which can be picked up this month and next from just outside Hormuz. Buyers included both state-owned and independent Chinese firms, along with other importers in East Asia, according to traders who chose to remain anonymous.
The global oil market is now paying close attention to the effects of the pipeline's suspension, which served as a key route for Saudi Arabia to avoid disruptions caused by conflicts in Hormuz. The pipeline was closed last week due to attacks, and there has been no announcement regarding when it will reopen. The increase in spot sales via the Persian Gulf indicates that Riyadh is shifting back to its traditional transport methods despite ongoing shipping risks.
Since the pipeline shutdown, Aramco has postponed deliveries from its Yanbu port on the Red Sea to some European buyers and at least one refiner in East Asia. The exact details of these delays have not been disclosed.
The spot shipments sold by Aramco are scheduled for transfer from the Gulf of Oman on a ship-to-ship basis between September and October. This arrangement means that although the crude will still pass through Hormuz, buyers won’t have to manage that leg of the journey since the pick-up location is outside the strait.
Saudi Aramco has chosen not to provide any comments on the situation.