Asian refiners resist Saudi Aramco request to load oil at Red Sea port amid Houthi threat
Most processors in China, Taiwan and India were asked to collect their oil from Yanbu
Several Asian oil refiners are opposing Saudi Aramco's directive to collect their oil at the Red Sea port of Yanbu, due to concerns over the risks associated with navigating the volatile waterway. Recent assaults on tankers and energy infrastructure by Iranian-backed Houthi militants in the Red Sea have heightened dangers for shipowners, further destabilizing the region.
Yanbu played a pivotal role in Saudi Arabia's shipping operations after the conflict disrupted traffic through the Strait of Hormuz and restricted supplies from the Persian Gulf. At least two Asian refiners have inquired about alternative collection points, specifically Egypt's Sidi Kerir port, according to unnamed traders. This request pertains to deliveries scheduled for September under long-term agreements with Aramco.
However, one refiner might opt to forego its monthly allotment due to the increased expenses involved in transporting crude from Sidi Kerir across Africa to Asia. Some shipments of Saudi crude have already been rerouted to Sidi Kerir before Aramco's September allocations. As part of its September distribution, Aramco requested that Japanese and South Korean refiners pick up their shipments from Sidi Kerir, according to the traders.
Most processors in China, Taiwan, and India were designated to collect their oil at Yanbu. Refiners acquire Saudi oil through annual contracts with negotiated quantities, but they have the flexibility to adjust or skip their monthly allocations as needed. The exact September volume has not been disclosed, but traders indicate that the quantities supplied to refiners outside of China align with previous months.
Prior to the Houthi threats, all Saudi oil destined for Asia was loaded at Yanbu and typically navigated through the narrow Bab el-Mandeb strait at the Red Sea's southern extremity. Two Chinese-owned tankers transited Bab el-Mandeb in July, carrying Saudi crude, but many vessels are becoming less visible in a bid to evade detection and potential attacks.
For September, Aramco reduced its main crude price for Asian customers, which now represents the lowest level since 2020. These prices apply to oil loaded at Ras Tanura in the Persian Gulf, while the actual costs paid by refiners for supply loading elsewhere are higher due to the additional logistics expenses incurred in transporting the crude farther afield.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
