Saudi Arabia, its biggest oil exporter, is increasing shipments from the Red Sea, but volumes are far from offsetting declines from the crisis-hit Strait of Hormuz, shipping data showed.
Saudi Arabia and other Gulf producing states (United Arab Emirates, Kuwait and Iraq) suspended shipments to Hormuz starting Saturday after the United States and Israel attacked Iran and Tehran retaliated with drone and missile attacks.
With hundreds of ships currently stuck near the strait, Aramco has instructed some buyers to load their cargo at the Red Sea port of Yanbu, the people said.
The terminal loaded 9.4 million barrels, or 1.9 million barrels per day (bpd), in the first five days of March, up about 60% from February’s 1.1 million barrels per day and January’s 1.3 million barrels per day, according to LSEG data.
Saudi Arabia exports more than 7 million barrels per day, of which approximately 6 million barrels pass through the Strait of Hormuz. In theory, Saudi Arabia could transport up to 5 million barrels per day to the Red Sea via the East-West pipeline.
Traders say the Red Sea port can handle more than 4.5 million barrels a day, but rarely loads more than 2.5 million barrels a day, and that the pipeline is primarily designed to transport Arab Light, one of several crude oil grades produced by the kingdom.
The Red Sea route also faces risks due to shipping disruptions caused by Houthi attacks during the Israel-Gaza war.
Some tanker facilities destined for Yanbu have failed due to high freight costs and safety risks, traders and shipbrokers said. The tanker “Pantanassa” was scheduled to be loaded in Yanbu on March 28th and 29th to transport oil to South Korea.
About 10 tankers are expected to call at Yanbu, according to Kpler data. Contracts for at least four more tankers were finalized on Wednesday and Thursday, shipping sources said.
India’s Reliance has tentatively agreed to salvage a supertanker carrying up to 2 million barrels of crude oil and a smaller Suezmax vessel capable of carrying up to 1 million barrels, the people said, asking not to be identified as the deal is confidential.
Reliance could not be reached for comment.
Rystad Energy’s Janif Shah said in a conference call Thursday that shippers are having trouble finding tankers near Yanbu and it will take several days for new ships to arrive.
According to Rystad, nearly 10% of mainstream oil tankers are stuck near the Strait of Hormuz.
(Reporting by Dmitry Zhdanikov, Akhmad Ghadar, Enes Tunagul and Jonathan Saul in London; Georgina McCartney and Alathy Somasekhar in Houston and Nerijus Admaitis in Oslo; Editing by Nivedita Bhattacharjee)
