(March 9): Saudi Aramco has offered prompt crude supply through a series of rare tenders, as the effective closure of the Strait of Hormuz traps shipments and forces a rerouting of flows via the Red Sea.
The world’s largest crude exporter has offered three grades — Arab Extra Light, Arab Heavy and its flagship Arab Light — according to traders with direct knowledge of the matter. It’s offered a total of roughly 4.6 million barrels of those varieties in recent days, said the traders, asking not to be named as they aren’t authorised to speak to the media.
Some of the oil was offered on a delivered basis from a supertanker, carrying two million barrels of crude, positioned near Taiwan, which was eventually purchased by a Japanese refiner at a US$30-to-US$40-a-barrel premium to official selling prices, traders said. The remainder would be for loading at the port of Yanbu on Saudi Arabia’s Red Sea coast, as well as from Ain Sokhna in Egypt.
Aramco declined to comment.
The spot tenders reflect a market under stress. The Saudi producer is unable to sell oil through conventional channels in the Persian Gulf. It also typically only supplies crude via long-term contracts. But now, the kingdom is directing unprecedented amounts of oil via a pipeline to Yanbu.
The tenders offered the oil at a premium over official selling prices for March, the traders said. The OSPs were set a month ago, before the current war in the Middle East began.
See also: Oil surges above US$100 as Iran war chokes off supply
The shipments from its western terminals have surged to a rate of about 2.3 million barrels a day so far this month, according to ship-tracking data compiled by Bloomberg. That’s about 50% more than the kingdom shipped from those terminals in any month since the end of 2016, the data shows.
No Saudi crude has been shipped through the Strait of Hormuz chokepoint so far this month. The last tanker to make it through the passage was the New Vision, which transited on the night of Feb 28, ship-tracking data showed.
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