Saudi Aramco sells 4M barrels to China via Fujairah transfers

Saudi Aramco has sold at least 4 million barrels of crude oil loading outside the Strait of Hormuz to two Chinese refiners, according to Reuters, as the world's largest oil exporter works to reclaim market share lost during the prolonged disruption to Gulf shipping lanes.reuters

The sales, confirmed by trade sources on Wednesday, involve Arab Medium and Arab Heavy crude offered via ship-to-ship transfers off Fujairah in the United Arab Emirates. The deals mark an escalation of Aramco's efforts to supply Asian buyers without requiring their tankers to transit the contested strait, where Iranian attacks and mines have made passage perilous since Tehran closed the waterway in July.manilatimes+1

Aramco's Multi-Route Strategy

The Fujairah transfers mirror a strategy already employed by Abu Dhabi National Oil Company, which has sold more than 100 million barrels through tenders using terminals beyond the strait. Aramco has simultaneously diverted its Arab Light crude to the Red Sea port of Yanbu and offered cargoes from Egypt's Mediterranean port of Sidi Kerir.marinelink+1

Data from shipping tracker Kpler shows 670,000 barrels of Middle Eastern crude set to load at Sidi Kerir for Asia this month, up from zero in the prior three months. However, the Sidi Kerir route has gained limited traction with Asian buyers. Emma Li, Vortexa's China analyst, said Chinese customers "were not satisfied with the long journeys and high freight costs."marinelink

Aramco has also resumed some crude loadings from inside the strait itself. Between August 12 and 16, three very large crude carriers loaded 2 million barrels each from the Juaymah and Ras Tanura terminals, ending a three-week gap in port loadings, according to Kpler and Vortexa data. Six more VLCCs may load Saudi oil in the strait by month's end.marinelink

A Constrained Waterway

The resumption comes against a backdrop of severely reduced traffic. Only six commodity ships passed through the Strait of Hormuz on Tuesday, 45 percent fewer than the 10-day average of 11, according to shipping data. Prewar flows through the strait accounted for roughly 20 percent of global oil consumption; disruptions have curtailed shipments to less than half of preconflict levels.washingtontimes+1

Gordon Gray, a former U.S. ambassador and professor at George Washington University, told the Washington Times that alternate routes "can only make up half of the estimated 20 million barrels that used to pass through the Strait of Hormuz on a daily basis."washingtontimes

Market and Dividend Pressures

Brent crude settled at $91.62 on Wednesday, a four-week high, as geopolitical risk continues to support prices. Aramco CEO Amin H. Nasser said the company had "continued to demonstrate our ability to maintain business continuity," pointing to its East-West Pipeline and diversified export terminals.ts2

Yet the logistical workarounds carry costs. Japan's Idemitsu Kosan reported that rerouted Saudi voyages may take 50 to 60 days compared with the usual 20, pushing up freight and working-capital expenses. Aramco's Q2 free cash flow of $12.3 billion covered just 56 percent of its $21.9 billion base dividend, with a $13.6 billion working-capital build driven largely by longer shipping times.ts2