Saudi Aramco Offers Asian Buyers Crude Outside Strait of Hormuz

RIYADH, SAUDI ARABIA — WEB DESK: Saudi Aramco is offering some Asian refiners crude oil that can be collected outside the Strait of Hormuz, as prolonged regional shipping disruptions force Gulf producers to seek alternative ways to keep exports flowing.

The Saudi state oil giant is in private discussions with buyers over supplies of Arab Medium and Arab Heavy crude through ship-to-ship transfers off the coast of Fujairah in the United Arab Emirates, according to two sources familiar with the matter cited by Reuters.

One source said the cargoes were intended for September loading. Aramco declined to comment on the reported arrangements.

Fujairah offers route outside Hormuz

The plan would allow Asian refiners to take delivery of Saudi crude without sending their own tankers through the Strait of Hormuz, where commercial traffic has been severely disrupted by the continuing US-Iran conflict and heightened maritime security risks.

Fujairah sits on the Gulf of Oman side of the UAE, outside the Strait of Hormuz, making it an important energy and bunkering hub during periods of disruption inside the Persian Gulf.

The proposed ship-to-ship arrangement is unusual for Saudi Aramco and mirrors strategies already being used by Abu Dhabi National Oil Company, or ADNOC, to maintain exports despite turmoil around the strait.

September allocations handled more flexibly

Aramco has already been handling some of its September crude allocations to Asian term customers on an ad hoc basis because of disruptions to Middle Eastern shipping routes.

The company has also shifted part of its Arab Light exports towards Saudi Arabia’s Red Sea port of Yanbu and offered crude loading from Egypt’s Mediterranean terminal at Sidi Kerir, providing buyers with alternatives that do not depend on normal Gulf-to-Asia routes.

Those alternative routes can reduce exposure to Hormuz, although they may add logistical complexity, longer voyages or higher transportation costs.

Red Sea disruptions complicate alternatives

Saudi Arabia’s challenge is not limited to the Strait of Hormuz.

Red Sea exports have also faced growing security risks following threats and attacks linked to Yemen’s Houthi movement. Tankers loading Saudi crude at Yanbu have increasingly turned off tracking systems to reduce exposure to attack, according to Reuters.

That means Saudi Arabia is having to manage disruptions on both of its principal export corridors at the same time.

Some crude has been routed north through Egypt’s SUMED pipeline system and towards Sidi Kerir on the Mediterranean coast, helping reduce dependence on the Bab al-Mandeb route.

Asian refiners face tighter supply options

The disruptions have affected Aramco’s position in important Asian markets, including India, where refiners have been forced to reassess supply security and alternative crude sources.

Before the latest conflict, roughly one-fifth of global oil and liquefied natural gas supplies moved through the Strait of Hormuz, making any disruption to the waterway a major concern for Asian energy importers.

Recent ship-tracking data has shown just how sharply traffic has fallen. Kpler recorded only five commodity vessels passing through the strait on Saturday and none on Sunday, compared with 31 over the previous weekend.

UAE keeps exports flowing

The United Arab Emirates has been able to maintain significant crude exports by moving oil from inside the Gulf to loading points outside Hormuz and using more flexible shipping arrangements.

ADNOC has expanded spot sales to Asian refiners and increased its use of alternative logistics, helping it preserve access to buyers despite the disruption.

Reuters reported that ADNOC sold at least 14 million barrels of spot crude to Asian refiners in its latest tender, while its broader wartime marketing strategy has included greater use of tenders and more flexible customer arrangements.

Energy markets remain sensitive

The difficulty of moving crude through the region continues to support oil prices.

Brent crude settled at $90.87 a barrel on Monday, while US West Texas Intermediate finished at $84.50, as stalled diplomacy and shipping disruptions reinforced concerns about supply.

For Saudi Aramco, offering crude outside Hormuz provides another way to reassure customers that supplies can continue even if maritime traffic through the strategic strait remains constrained.

The longer the disruption lasts, the more important alternative loading points such as Fujairah, Yanbu and Sidi Kerir are likely to become for Middle Eastern exporters seeking to maintain access to Asian markets.