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Saudi Arabia is slashing its crude oil exports to Asia in April, for a second month in a row, as the de facto closed Strait of Hormuz is stranding most of the supply from the world’s top crude exporter.
Saudi oil giant Aramco has notified customers of term supply in Asia that they would receive in April only the flagship Arab Light grade loaded at the Yanbu export port on the Red Sea, Reuters reported on Monday, quoting sources familiar with the plans.
So far in March, Saudi Aramco has exported about 4.355 million barrels per day (bpd) of crude, according to Kpler data cited by Reuters. That’s way below the 7.1 million bpd in exports in February.
Saudi Arabia is seeking to redirect as many barrels as possible to the Yanbu port on the Red Sea. This export route doesn’t need passage through the Strait of Hormuz, where Iran is now selectively and politically ensuring safe passage through the chokepoint for some vessels.
Yanbu is the only currently open export route for the Saudi Arab Light crude, as the Kingdom is scrambling to boost loadings from the port.
The Saudis are expected to boost oil exports through Yanbu to a record high of 3.8 million bpd this month.
Of particular concern to these plans is the Bab el-Mandeb Strait, where the Iran-aligned Houthis targeted vessels two years ago, but have been noticeably absent from the conflict so far.
Vessel-tracking data suggest that Saudi Arabia is betting big on the Yanbu port, but even record-high shipments from the Red Sea port cannot fully offset the supply lost at the Strait of Hormuz.
Saudi Arabia is estimated to have already slashed its crude oil production by over 2.5 million bpd as export routes are constrained.
The substantially lower term supply of Saudi crude to Asia will create further troubles for Asian refiners to seek alternative barrels.