Saudi Arabia is actively increasing prompt crude oil sales from locations outside the Strait of Hormuz due to the recent shutdown of the East-West pipeline, which previously facilitated the flow of oil to the country’s Red Sea coast. This week, Saudi Aramco has reportedly sold around 20 million barrels to refiners in Asia, with shipments scheduled for this month and next. Buyers include a mix of state-owned and independent Chinese refineries, along with other East Asian importers, as per anonymous trader sources.
The disruption caused by the pipeline closure, primarily a response to attacks, has drawn significant attention in the global oil market. This pipeline played a crucial role in allowing Saudi Arabia to bypass turbulence in Hormuz caused by the ongoing tensions related to Iran. The Saudi authorities have yet to provide a timeline for the resumption of pipeline operations, pushing them to revert to more traditional shipping routes despite the inherent risks.
Following the closure, Aramco has postponed deliveries from its Red Sea port of Yanbu to some European and East Asian buyers, though the exact details of these delays remain uncertain. The crude sold by Aramco is designated for loading from the Gulf of Oman, using a ship-to-ship transfer method, which means that while the crude will pass through Hormuz, the buyers will not be held accountable for that transit. Saudi Aramco has not commented on the situation.
