Saudi Aramco offers crude outside Strait of Hormuz

Saudi Aramco is offering crude oil on a ship-to-ship basis from locations outside the Strait of Hormuz, including off the coasts of Oman and the United Arab Emirates, as the kingdom works to maintain exports amid ongoing disruptions from the Iran conflict and Houthi attacks in the Red Sea.

Bypassing the Strait

State oil company Aramco is offering Arab Medium and Arab Heavy crude from locations including Sohar in the Gulf of Oman, according to Bloomberg, citing people familiar with the matter. Separately, Reuters reported Monday that Aramco is in talks with Asian refiners to supply the same grades via ship-to-ship transfers off Fujairah in the UAE, with cargoes available for September loading.bloomberg+2

The moves mirror a strategy already employed by Abu Dhabi National Oil Co (ADNOC), which has sold more than 100 million barrels through tenders by shuttling crude from inside the Persian Gulf to waters beyond the strait. The arrangements allow Asian refiners to receive crude without sending their own tankers through the waterway, where security concerns have deterred many shipowners.reuters

Pressures on Saudi Exports

Saudi Arabia had initially relied on diverting exports to its Red Sea port of Yanbu, which receives Arab Light and Extra Light grades via pipeline. However, even those flows have come under threat after Yemen's Houthi militants declared a maritime blockade on Saudi Arabia in recent weeks.theedgemalaysia

The disruptions to both the Strait of Hormuz and Red Sea shipping have curtailed Aramco's market share in key consuming markets such as India, according to Reuters. Satellite imagery cited by Bloomberg shows vessels with at least nine million barrels of transport capacity have loaded at or near Saudi Arabia's Ras Tanura export installations over the past week, and the kingdom has amassed a large cluster of oil supertankers just outside the Persian Gulf.reuters+1

Market Context

Middle Eastern oil producers pressing ahead with shuttling operations have helped keep a lid on oil prices and eased fears of an energy-driven inflation spike. Aramco declined to comment on the offers.theedgemalaysia+1