Key facts
- Saudi Aramco is using ship-to-ship transfers outside the Strait of Hormuz to deliver crude oil to China.
- This arrangement allows buyers to receive cargoes without their vessels entering the Strait.
- Two VLCCs carrying a combined 4 million barrels of Saudi crude were headed to China after transfers off Sohar, Oman.
- Aramco has resumed loading tankers at Ras Tanura and Juaymah and is routing more crude west via the East-West pipeline for European customers.
- The strategy aims to keep crude flowing despite security concerns in key export corridors.
Saudi Arabia is employing a new strategy of ship-to-ship transfers outside the Strait of Hormuz to ensure crude oil deliveries to Asia, particularly China, amidst ongoing security concerns in the region. Saudi Aramco is offering more crude for September delivery using this method, allowing buyers to receive their cargoes without their own vessels needing to navigate the Strait.
Two very large crude carriers (VLCCs) carrying a combined 4 million barrels of Saudi crude were en route to China after undergoing transfers off Sohar, Oman. These cargoes are destined for Sinopec, with expected arrivals in September. This approach represents an adaptation by Saudi Arabia to maintain oil flow despite compromised export routes.
Earlier, Saudi Arabia had resumed loading tankers at its Persian Gulf terminals and was routing more crude west through the East-West pipeline and Egypt’s Sidi Kerir terminal to serve European customers, bypassing the Strait of Hormuz. However, for Asian buyers like China, geography makes this pipeline solution less viable, necessitating the ship-to-ship transfer method.
The arrangement effectively divides the journey, with Aramco managing the riskiest segment before handing off the crude to buyers in safer waters. This strategy, while not a return to normal trade, ensures that Saudi barrels continue to reach China, with the responsibility for navigating the Strait of Hormuz now falling on Aramco.