Top oil exporter Saudi Arabia is increasing shipments from the Red Sea, but the volumes are far from enough to offset the drop from the crisis-hit Strait of Hormuz, shipping data showed.
Saudi Arabia and other Gulf producers – the United Arab Emirates, Kuwait and Iraq – have halted Hormuz shipments since Saturday after the United States and Israel attacked Iran and Tehran retaliated with drone and missile strikes.
With hundreds of vessels now stuck near the strait, Aramco has told some buyers to load cargoes at the Red Sea port of Yanbu, sources said.
The terminal loaded 9.4 million barrels, or 1.9 million barrels per day (bpd), in the first five days of March, up about 60% from 1.1 million bpd in February and 1.3 million bpd in January, according to LSEG data.
Saudi Arabia exports over 7 million bpd, of which around 6 million bpd pass through the Strait of Hormuz. The kingdom can, in theory, reroute up to 5 million bpd to the Red Sea via the East-West pipeline.
The Red Sea port could handle in excess of 4.5 million bpd, but rarely loaded more than 2.5 million bpd, traders said, and the pipeline is mainly designed to transport Arab Light, one of several crude grades the kingdom produces.
The Red Sea route also carries risks from Houthi forces, whose attacks disrupted shipping during the Israel-Gaza war.
Some tanker fixtures for Yanbu failed due to high freight rates and security risks, traders and ship brokers said. One such was tanker Pantanassa, which had been due to load at Yanbu on March 28 and 29 to deliver oil to South Korea.
Around 10 tankers are expected to call at Yanbu, according to Kpler data. Deals for at least four more tankers were being fixed on Wednesday and Thursday, shipping sources said.
India’s Reliance provisionally agreed to lift one supertanker with up to 2 million barrels of crude and a smaller Suezmax ship that can carry up to 1 million barrels,the sources, speaking on condition of anonymity because the deals are confidential, said.
Reliance was not immediately available for comment.
Shippers are struggling to find tankers in proximity to Yanbu and it will take several days for new ships to arrive, Janiv Shah from Rystad Energy said on a conference call on Thursday.
Nearly 10% of mainstream oil tankers are trapped near the Strait of Hormuz, according to Rystad.
(Reporting by Dmitry Zhdanikov, Ahmad Ghaddar, Enes Tunagur and Jonathan Saul in London, Georgina McCartney and Arathy Somasekhar in Houston, Nerijus Adomaitis in Oslo. Editing by Nivedita Bhattacharjee)