Saudi Arabia is set to increase its crude exports from the Gulf during September and October, according to several trade sources. Around 60 million barrels of Saudi crude have been sold for loading through ship-to-ship transfers near Oman’s Sohar port, the sources said.
The shipments originate from Saudi Aramco’s Ras Tanura port inside the Strait of Hormuz. The increased volumes could help offset some of the crude affected by lower exports from the Red Sea port of Yanbu.
Exports from Saudi Arabia’s Gulf facilities are expected to average between 1 million and 1.5 million barrels per day. That level is broadly similar to, or slightly above, August’s volumes.
Asian Refiners Among Main Buyers
Chinese and South Korean refiners are among the major buyers of the available spot cargoes, according to the trade sources. Some shipments are also expected to go to India and Japan.
Saudi Aramco had not immediately responded to a request for comment outside normal business hours.
Meanwhile, global oil futures fell by more than $1 a barrel on Friday. Reports that Saudi Arabia could restore around half of the East-West pipeline’s capacity within days added to expectations of improved supply.
The prospect of additional Saudi crude reaching Asian markets through ship-to-ship transfers also weighed on prices.
Ship-to-Ship Transfers Help Maintain Supplies
The increased Gulf shipments are particularly important for Asian refiners. Asia remains the main destination for Saudi crude.
However, transporting the oil has become more expensive. Supertanker freight rates reached record levels this week as traders adjusted to the changing shipping routes.
A shipbroking firm reported that the rate for chartering a very large crude carrier carrying 2 million barrels from Fujairah to Asia in early October reached 800 Worldscale.
Japan Says Supplies Remain Secure
Japan’s oil industry has also been monitoring the alternative shipping arrangements. The Petroleum Association of Japan said refiners had secured enough crude supplies through November.
PAJ President Shunichi Kito said some Saudi oil is still reaching buyers despite the risks surrounding the Strait of Hormuz.
In some cases, the crude travels through the Strait before being transferred outside the Gulf, Kito said. As a result, Saudi shipments to Japan have not stopped completely.
Gulf Exports Could Support Asian Markets
The higher Saudi Gulf exports provide additional supply for Asian refiners at a time when shipping routes and pipeline operations remain under pressure.
The shipments also give buyers more flexibility while Saudi Arabia works to restore pipeline capacity. However, freight costs and security risks around regional shipping routes remain important factors for the global oil market.
