Saudi Arabia’s oil giant Aramco is requesting from Asian buyers to nominate crude loading plans for April for both its key export port in the Gulf and the export alternative on the Red Sea, multiple sources told Reuters on Wednesday.
The crisis at the Strait of Hormuz has reverberated through global markets. With the Strait effectively blocked for tanker traffic, Saudi Arabia has diverted part of its crude oil exports from the Ras Tanura export terminal in the Gulf that needs free-flowing traffic through Hormuz to the Yanbu export port on the Red Sea.
The loading option at Yanbu applies only to the purchase of Arab Light, Saudi Arabia’s flagship crude grade, according to Reuters’ sources.
Saudi Arabia can replace a small portion of the lost export option at the Ras Tanura port with loadings from Yanbu, which bypass the Strait of Hormuz.
Saudi Aramco uses the East-West pipeline which on paper has the capacity to move about 7 million barrels per day (bpd) of crude towards the Red Sea. But there’s the question about how much can the terminals at Yanbu load, with some estimates putting this capacity at around 3 million bpd, Vortexa said last week.
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Between March 1 and 9, immediately after the Strait of Hormuz was effectively shut for tanker traffic, loadings at Yanbu averaged 2.2 million bpd, doubled compared to the February average, according to LSEG data cited by Reuters.
From the Strait of Hormuz, Aramco shipped some 6 million bpd before the blockage.
Yanbu on the Red Sea cannot offset all the lost shipments via the Strait of Hormuz. That’s why Saudi Arabia and the other top Gulf oil producers have slashed crude oil production in recent days as storage capacity fills up and the crude doesn’t have a way out of the Strait of Hormuz.
Saudi Arabia has slashed its oil production by between 2 million bpd and 2.5 million bpd, anonymous sources familiar with the situation told Bloomberg on Tuesday.
By Charles Kennedy for Oilprice.com
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