Aramco weighs new pricing for Asia crude amid Houthi blockade

Saudi Aramco is considering a new pricing mechanism for crude oil loaded from Egypt's Mediterranean port of Sidi Kerir and destined for Asian buyers, as rerouted exports face sharply higher shipping costs following a Houthi naval blockade on Red Sea shipments, according to sources cited by Reuters.reuters+1

Rerouting Raises Costs for Asian Refiners

The world's largest oil exporter has been channeling crude through the Suez-Mediterranean (SUMED) pipeline to Sidi Kerir after Yemen's Houthi forces declared a maritime blockade on Saudi Arabia in mid-July, targeting tankers transiting the Bab el-Mandeb Strait. Aramco is now evaluating whether to adjust its official pricing to account for the longer voyage via the Mediterranean, past Gibraltar, and around the Cape of Good Hope to reach Asian destinations.youtube+2

Three sources with knowledge of the matter told Reuters that the additional freight burden could cost Asian buyers roughly $5 per barrel, or about $10 million extra per shipment. The pricing review comes as Aramco has been offering additional spot cargoes from Sidi Kerir to supplement supplies for its long-term customers.theedgemalaysia+3

Yanbu Loadings Drop as Blockade Tightens

Maritime intelligence firm Windward reported that crude oil loading at Saudi Arabia's Yanbu port on the Red Sea has decreased by approximately 40% since July 19, when the Houthi blockade intensified. Yemeni forces have reportedly targeted three Saudi oil tankers in the past 48 hours, and 16 Saudi ships have been forced to turn back after being denied passage.atlaspress+1

The Houthi blockade represents the latest disruption to Saudi crude flows. Aramco had previously maximized capacity on its 1,200-kilometer East-West pipeline to move oil from eastern fields to Yanbu as an alternative after Iran's closure of the Strait of Hormuz. Now that route, too, faces obstruction.gcaptain

Market Context

The compounding disruptions have already pushed oil prices higher. Brent futures exceeded $100 a barrel last week for the first time since late May, according to Al Jazeera. Saudi Arabia had already slashed its August official selling prices for Asia by $11 a barrel in early July — the largest cut in more than two decades — in an effort to attract demand amid shifting supply routes.aljazeera+2

The potential introduction of a separate pricing formula for Sidi Kerir cargoes would mark a departure from Aramco's standard practice of pricing all Asia-bound crude uniformly from its loading ports, reflecting the new logistical realities imposed by the conflict.