Saudi Arabia has sold almost 100 million barrels of oil to Asian buyers since the middle of last week, helping to avert a looming supply crunch.
The crude for delivery in October and November will be sent via the Strait of Hormuz, traders told Bloomberg. Chinese state-run and independent refiners, as well as processors in India, Japan and South Korea, are among the buyers, they said.
The unusual flurry of sales is equivalent to about one day of total global demand, and would represent a more than doubling of recent Saudi-to-Asia flows through the Strait of Hormuz.
It comes as the kingdom’s East-West pipeline, which bypasses Hormuz by carrying oil to the Red Sea, is still not fully operational after being attacked on September 10.
Saudi Aramco is in the early stages of restarting the conduit and is aiming for a meaningful restoration by Saturday. The problems with the pipeline have forced the Saudis to export more oil through the Strait of Hormuz, with satellite data showing observed loadings from within the Arabian Gulf jumping over the weekend.
Critically, Aramco is offering to manage logistics and transport the crude all the way to Asian customers, the traders said. Aramco declined to comment.
The oil will be welcomed in Asia, where Chinese and Indian refiners have been thinking about lowering run rates due to soaring prices. Iranian flows have dried up due to a US blockade, while buyers have been avoiding Russian crude because of rising political risks.
This has intensified competition for grades from Africa to Latin America. Over the course of the US-Iran war, the onus for transporting oil has gradually shifted from buyers to sellers.
Gulf producers used to typically offer crude on a so-called free-on-board basis, meaning customers had to send their own vessels to pick it up. However, since the start of the conflict, refiners have been reluctant to do so due to the threat of attacks.
Now, Gulf producers are offering to shoulder more of the shipping risks.
