Saudi Arabia has increased crude exports through the Strait of Hormuz while the onshore East-West pipeline remains out of service. Trade sources cited by Reuters said the kingdom has sold as much as 60 million barrels of crude from the Ras Tanura port for September and October loadings.
According to those sources, Saudi Aramco has offered buyers the option of loading crude from Ras Tanura through ship-to-ship, or STS, transfers at the port of Sohar in Oman, just outside the Strait of Hormuz. The arrangement gives Saudi Arabia a way to keep exports moving while its main bypass route is unavailable.
Late last week, Saudi Arabia shut the East-West oil pipeline after drone attacks launched on Thursday from Iraqi territory near the Iranian border. The roughly 750-mile pipeline had enabled the kingdom to reroute most crude shipments from its eastern Persian Gulf ports to the Red Sea port of Yanbu, avoiding the Strait of Hormuz.
Riyadh is now leaning again on Hormuz shipments to maintain crude exports at a reasonable level and preserve its standing as a reliable supplier. Reuters sources said the volumes moving through that route are being taken mostly by refiners in China and South Korea, while some cargoes have also been booked for Japan and India.
Markets viewed the move as easing near-term supply risk. The rebound in Saudi crude exports through Hormuz has capped further upside in oil prices even with the East-West pipeline still offline. Early on Friday, oil prices were heading for a weekly decline after three straight weeks of gains, as concerns about Saudi Arabia’s export capacity faded following reports of ship-to-ship transfers in the Gulf of Oman.
