Saudi Aramco handles Sept Asia crude allocations on ad hoc basis
SINGAPORE/NEW DELHI: Saudi Aramco is handling September crude allocations to some of its Asian term customers on an ad hoc basis after Middle East hostilities disrupted the kingdom’s exports, three sources familiar with the matter said. The shift underscores how hostilities around the Strait of Hormuz and the Red Sea have disrupted supplies from the world’s biggest oil exporter, which has left…
Saudi Aramco is allocating September crude to Asian term customers on an ad hoc basis due to disruptions caused by Middle East hostilities, according to sources familiar with the situation. This ad hoc approach highlights the impact of ongoing hostilities around the Strait of Hormuz and the Red Sea on Saudi oil exports, leaving buyers uncertain about securing vessels and increasing their contracted volumes.
Typically, term buyers submit their requested loading volumes to Saudi Aramco after the company announces its official selling prices at the beginning of each month, with allocations announced around the 10th of the month. However, four Chinese buyers have not yet received their September allocations, and some are discussing individual volume adjustments with Aramco.
An Indian refining source stated that while its allocation is full, it remains conditional due to uncertainty over securing vessels and lifting the crude. Aramco did not provide a response to a request for comment on its September crude allocations. Earlier this month, Aramco reduced its September OSP for Arab Light to Asia to a six-year low in an effort to boost demand.
Refiners, who traditionally buy Saudi crude on a free-on-board basis, face challenges in arranging shipments as few shipowners are willing to navigate the Strait of Hormuz or the Red Sea to load from Saudi's main export ports. The Houthis declared a maritime embargo against Saudi Arabia on July 20, leading to attacks on Saudi-linked tankers, Yanbu oil facilities, and the Jazan refinery on the Red Sea coast.
Saudi Arabia has offered additional crude cargoes for loading from Egypt's Mediterranean port of Sidi Kerir, but Asian buyers have been hesitant to lift from Sidi Kerir due to increased voyages and higher freight costs. Saudi crude shipments to Asia are closely monitored by market participants as an indicator of demand from the largest oil-importing region.
According to Kpler data, Saudi Arabia shipped 4.9 million barrels per day of crude to Asia last year, but shipments fell below 3 million bpd in July.
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