RIYADH: Saudi Arabia has increased crude oil shipments from its export terminals in Yanbu on the Red Sea coast, diverting supplies away from the Arabian Gulf and the Strait of Hormuz, which Iran has effectively closed since the end of February.
The disruption of the Strait of Hormuz has halted approximately 15 million barrels per day of crude oil shipments that normally leave the Arabian Gulf for global markets. This has led to a sharp rise in oil prices, leaving refineries scrambling and creating shortages of key fuels.
The Kingdom is one of only two countries in the region capable of diverting significant volumes of oil bypassing Hormuz, providing a crucial lifeline for supplies.
Riyadh is aiming to increase export shipments from its Red Sea ports to 5 million barrels per day, a target now considered “within reach.”
The East-West pipeline, which connects the processing center in Abqaiq to Yanbu, has a nominal capacity of 7 million barrels per day. However, 2 million barrels of this amount are needed to supply refineries in Riyadh and on the Red Sea coast in Yanbu and Jazan, near the border with Yemen, as well as power plants and desalination plants.
Oil flows through Yanbu port increase
Crude oil shipments destined for export from the Yanbu South and Yanbu North terminals averaged 4.4 million barrels per day during the five days leading up to March 24, according to ship-tracking data compiled by Bloomberg. Flows through Yanbu have steadily increased after the Kingdom moved quickly to pump oil through its 746-mile pipeline to the Red Sea.
Saudi Arabia’s efforts to reroute shipments have more than doubled crude oil exports from Yanbu in just over two weeks. However, these diversions will only be enough to offset about half of the lost shipments from the Arabian Gulf this month. Even at target levels, Yanbu exports will leave the Kingdom’s crude oil exports roughly 2 million barrels per day below pre-war levels.
Around 56 million barrels of Saudi crude oil are stored on tankers stranded in the Gulf, according to Bloomberg calculations based on ship-tracking data. These cargoes were loaded in late February and early March but have been unable to transit the Strait of Hormuz into international waters.
40 oil tankers await loading
Tracking data shows that at least 40 oil tankers, mostly very large crude carriers capable of carrying around 2 million barrels each, are anchored near Yanbu, waiting to load.
Several vessels have stopped transmitting their Automatic Identification System signals in the Arabian Sea while en route to the Saudi port and may not reappear in tracking systems until they are well out of the area. This could lead to upward revisions in export figures.
The tankers that have loaded since the diversions began have mostly headed to Asia, with shipments to China and India dominating the flows. Shipments are also headed to South Korea, Pakistan, and Thailand. Customers in Japan were supplied from stockpiles on Okinawa Island, where Saudi Aramco leases storage tanks capable of holding 8.2 million barrels of crude oil.
In the early days of the conflict, shipments from Yanbu were mostly headed north to the Sumed pipeline, which crosses Egypt to bypass the Suez Canal. Saudi Arabia typically loads crude oil for its customers in Europe and on the east coast of North America from a terminal in Sidi Kirayr on Egypt’s Mediterranean coast.
