Saudi Arabia Pivots to Spot Oil Sales After Key Pipeline Goes Offline

This week, Saudi Arabia has sold approximately 20 million barrels of crude oil in the spot market, utilizing a method that avoids the obstructed Strait of Hormuz. The primary purchasers of this Saudi spot crude include Chinese refiners, state-owned and independent entities, as well as processors from other East Asian nations, according to unnamed traders.

The sales are scheduled for loading in the Gulf of Oman, rather than shipping through Hormuz, with buyers opting for ship-to-ship transfers in the Gulf of Oman. Following drone attacks originating from Iraq near the Iranian border last week, Saudi Arabia's East-West oil pipeline, a crucial route to circumvent Hormuz, was shut down.

This disruption has prompted Saudi oil company Aramco to either cancel or postpone some September deliveries to European refiners. As a response, the UAE has accelerated its ship-to-ship transfers of spot crude, a strategy perfected in recent months by the nation's oil company, ADNOC, which has supplied promptly in various tenders both within the Persian Gulf and the Fujairah-Sohar area outside the Strait of Hormuz.