No crude next month, Saudi Aramco informs European oil buyers
The absence of Saudi flows next month will heighten the need for European buyers to secure replacements
Saudi Aramco has informed European oil buyers that no crude will be allocated to them next month under long-term agreements, following an attack on the kingdom's key pipeline to the Red Sea, according to sources. This decision affects all European buyers who typically receive Saudi Arabian crude on term contracts for steady monthly supply.
The absence of Saudi crude flows will heighten the need for European buyers to secure replacements. Poland's Orlen SA has been hunting for shipments, contributing to higher prices of regional oil grades. Brent, the benchmark for European barrels, reached above $130 per barrel this week. Saudi Arabia shut down its East-West pipeline last week after being attacked by drones.
The company is working to partially restart within days and full capacity within six weeks. To compensate for the pipeline shutdown, Saudi Arabia has started supplying Asian customers on a spot basis. Once the pipeline resumes, traders will focus on whether Aramco offers similar terms to European refiners. Currently, shipments to Europe would have to sail through the Red Sea or around Africa, both challenging options.
European refiners typically receive Saudi crude from Egypt's Sidi Kerir port via a pipeline. In June, European OECD countries imported 577,000 barrels of crude daily from Saudi Arabia.
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