Saudi Arabia has turned to the immediate sale of oil from outside the Strait of Hormuz after the suspension of its East-West pipeline, which had halted oil flows to the Red Sea coast. These developments follow recent attacks on the pipeline last week.
Details of Saudi Arabia's Oil Shipments
Saudi Aramco has sold about 20 million barrels of oil to Asian refineries this week, which are set to be loaded from outside the Strait of Hormuz in September and October. Buyers include state-owned and independent Chinese refineries and other importers in East Asia. These developments indicate a shift in Saudi Arabia's strategy in response to the closure of the East-West pipeline.
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Consequences of the Pipeline Suspension
The suspension of this pipeline, which was one of the main routes for transporting Saudi oil to global markets, has impacted the global oil market and raised concerns about the stability of oil supply. With this route blocked, Saudi Arabia is looking to revert to its traditional routes, although transportation risks remain. Following this suspension, Aramco has delayed shipments from the Red Sea port of Yanbu to some European customers and at least one East Asian refiner.
Given that the sold oil shipments are being loaded ship-to-ship from the Gulf of Oman, this means that while the oil volumes must pass through the Strait of Hormuz, buyers will not have any responsibility for this part of the journey.
Amid these developments, oil prices have also significantly increased, with prices rising by more than $3 on Tuesday. This price increase is due to the suspension of oil loading at the Yanbu port and the halt of operations at three Libyan oil fields, raising concerns about the continuation of disruptions in key oil supply routes.
Meanwhile, Omani officials announced that the Panama-flagged tanker El Gaia is being transferred to port after controlling a fire on board, while two crew members of this tanker remain missing.
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