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Saudi Arabia produces about 10 million barrels a day of crude, with exports rising to about 7.2 million a day last month
By Serene Cheong, Yongchang Chin, Salma El Wardany and Rakesh Sharma
Saudi Aramco is exploring the option of delivering more cargoes to Yanbu, a port on the Red Sea that’s situated outside the Persian Gulf, where dozens of ships are hunkered down as the Strait of Hormuz remains effectively closed.
Aramco typically exports the bulk of its crude from ports within the Gulf, but conflict in the Middle East has led to a logjam of vessels. The world’s biggest oil exporter has a 5 million barrel-a-day pipeline that runs across the country which can transport oil from fields in the east to the Red Sea in the west.
Aramco did not immediately respond to a request for comment.
Aramco has asked some customers in Asia if they’re able to lift cargoes from Yanbu, according to people with knowledge of the matter, who asked not to be identified because the discussions aren’t public. Shippers are also being sounded out to assess if they would change loadings to Yanbu from the Persian Gulf, one of the people said.
The Red Sea is far from risk-free. Yemen’s Iran-backed Houthi militant group has threatened to resume attacks on vessels sailing through the waterway. Even though there haven’t been any known incidents since then, the concerns are significant enough for some of the biggest shipping lines to reverse earlier plans to return to the route.
Saudi Arabia produces about 10 million barrels a day of crude, with observed exports rising to about 7.2 million a day last month. The country’s 746-mile East-West Pipeline’s current capacity won’t be enough to cover all of its overseas sales.
Still, it gives the kingdom an alternative. Aramco has already suffered from the expanding war in the Middle East after the company was forced to shut its biggest refinery at Ras Tanura in the Persian Gulf following a drone strike. The slowdown of maritime traffic has also raised the fear of storage tanks in the region filling up, which might eventually result in production being curtailed.
—With assistance from Alex Longley, Rong Wei Neo, Weilun Soon and Anthony Di Paola.
Bloomberg.com
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