Asian refiners balk at loading Saudi crude from Red Sea amid Houthi attacks

Some Asian refiners are pushing back against Saudi Aramco's request to collect September crude oil cargoes from the Red Sea port of Yanbu, as escalating Houthi attacks make it increasingly difficult to find ships willing to transit the dangerous waterway, Bloomberg reported on Monday.bloomberg

At least two Asia-based refiners have asked Aramco if they can instead lift their purchased cargoes from Egypt's Mediterranean port of Sidi Kerir, the terminus of the SUMED onshore pipeline, which allows buyers to bypass the Bab el-Mandeb strait entirely, according to traders who spoke on condition of anonymity. At least one of those refiners may skip its monthly allocation altogether due to the higher costs of shipping crude from Sidi Kerir around Africa to Asia. Aramco declined to comment.oilprice+2

A Shifting Map of Saudi Exports

Yanbu became central to Saudi Arabia's crude exports after conflict disrupted traffic through the Strait of Hormuz and choked off supplies from the Persian Gulf. But since the Iran-aligned Houthis announced a blockade on Saudi shipments in the southern Red Sea and claimed several attacks on oil tankers beginning in late July, the port has itself become a risk.businesstimes+1

Saudi Arabia has responded by shuttling more crude from Yanbu to Egypt's Ain Sukhna port on the Red Sea, then pumping it through the SUMED pipeline to Sidi Kerir on the Mediterranean coast. As part of September allocations, Aramco asked Japanese and South Korean refiners to pick up cargoes from Sidi Kerir, while most processors in China, India, and Taiwan were directed to Yanbu. The Houthis have allowed China-linked and China-crewed vessels to move through the Red Sea.oilprice+2

Price Cuts and Route Economics

For September, Aramco cut its main crude price for Asian customers to the lowest discount since 2020. Those prices, however, are benchmarked to oil loaded from Ras Tanura inside the Persian Gulf, and the final cost for supply loaded elsewhere is higher due to added logistics.businesstimes+1

As Newsquawk noted, the pushback signals that Asian buyers are pricing freight and insurance friction rather than a supply shortfall — the crude still moves, but the route and cost basis change. Two Chinese-owned tankers transited Bab el-Mandeb carrying Saudi crude with transponders on in July, but many ships have been going dark to avoid detection and potential attacks.theedgemarkets+2