Saudi Aramco has canceled or delayed crude deliveries to European refiners after the shutdown of the kingdom’s East-West pipeline cut into one of its remaining routes around the Strait of Hormuz.
At least three European refiners have had late-September cargoes canceled or pushed as far out as November, according to market sources cited by Argus. Two more expect notices covering September supplies.
The 7-million-bpd East-West pipeline has been offline since a September 10 attack. The pipeline carries crude from eastern Saudi oil fields to the Red Sea port of Yanbu, bypassing Hormuz.
One market source told Argus that every Saudi cargo scheduled for the final 10 days of September could be at risk. The same source estimated that Yanbu had roughly five days of crude inventories remaining. Argus could not independently confirm that estimate, and Aramco declined to comment.
In August, Bloomberg had reported that Aramco would supply full contractual crude volumes to at least three European refiners for September.
But no Saudi crude has departed Yanbu since September 11, according to Vortexa data cited by Argus. Saudi exports from Egypt’s Sidi Kerir terminal averaged about 1.95 million bpd during the first two weeks of September. Arrivals at Ain Sukhna averaged 1.40 million bpd.
Crude exported through Yanbu can move to Egypt’s Ain Sukhna terminal and across the 2.5-million-bpd SUMED pipeline to Sidi Kerir on the Mediterranean.
Poland’s Orlen is already buying replacements.
Orlen purchased North Sea grades including Grane, Johan Sverdrup and Johan Castberg through spot tenders and sought offers for U.S. WTI Midland and Kazakhstan’s CPC Blend, traders told Reuters. At least four September tanker fixtures from Sidi Kerir to Gdansk have failed.
Aramco supplies roughly 40% of the crude processed by Orlen, which operates refineries in Poland, Lithuania and the Czech Republic. Orlen said its refineries continue receiving feedstock.
The East-West line had become one of Saudi Arabia’s most important alternatives to constrained Persian Gulf exports. Its shutdown is now reaching European term customers in the form of missing barrels.
By Julianne Geiger for Oilprice.com
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