Saudi Arabia Sells 100 Million Barrels of Crude to Asia via Hormuz

In the past week, Saudi Arabia has dispatched approximately 100 million barrels of crude oil to Asian markets through the Strait of Hormuz, a move prompted by the suspension of the East-West pipeline. As of October and November, the nation has delivered this volume of oil, which equates to a full day's worth of global oil demand, via the Hormuz route, according to trade sources familiar with the transactions shared with Bloomberg.

The Saudi government is handling the logistics and shipping the cargoes to Asia, sources close to the deals told Bloomberg without disclosing their identities. Buyers of the Saudi crude include Chinese refiners, both state-owned and private, as well as refineries in India, South Korea, and Japan. This surge in Saudi crude exports to Asia through the Hormuz route would more than double the previous levels, based on Bloomberg's calculations.

Following the shutdown of the East-West pipeline, Saudi Arabia has offered buyers of Ras Tanura port crude to be loaded onto ships at the port of Sohar in Oman, situated just outside the Strait of Hormuz. The Kingdom has increased ship-to-ship transfers at Sohar, and the escalation in Saudi crude oil exports via Hormuz has restrained the upward momentum in oil prices, despite the pipeline's unavailability.

Saudi Arabia briefly resumed partial operations on the pipeline, but full resumption of about 4 million barrels per day (bpd) would likely require several weeks. Concurrently, the substantial Saudi shipments of crude through Hormuz will maintain a supply to Asia while Red Sea exports recover. The augmented Hormuz shipments could also alleviate concerns about declining supply and prevent a surge in oil prices.