Saudi Arabia's oil sales to Asia jumped to nearly 100 million barrels; Aramco proactively chartered shipments directly to China, India, Japan, and South Korea: supply tightness expectations were revised by reality.
Saudi Arabia dumped nearly 100 million barrels of crude oil into Asian markets, providing a crucial buffer for Asian buyers amid continued turmoil in the global energy landscape.
According to Bloomberg, Saudi Arabia has sold approximately 100 million barrels of crude oil to Asian buyers since mid-last week, with deliveries covering October and November. Buyers include China, India, Japan, and South Korea. Meanwhile, Saudi Aramco has made a rare commitment in this transaction to handle all logistics and transportation, delivering the crude oil directly to Asian customers.
Previously, Asian refineries had been considering reducing operating rates due to soaring oil prices. Iranian crude oil supplies were nearly cut off due to US sanctions, and buyers had been avoiding Russian crude oil due to rising political risks. This large-scale supply from Saudi Arabia has, to some extent, mitigated the imminent supply shortage risk facing Asia.
According to Interfax news agency, Russia has cut its oil export forecast for this year by more than 20% and lowered its 2026 oil export forecast by 24 million tons to 98.5 million tons.
As of press time on Thursday, Brent crude futures were up 3.78% at $107 a barrel.
Pipeline damage forces Saudi Arabia to detour via the Strait of Hormuz for export.
The immediate trigger for this round of concentrated oil sales was the attack on the East-West oil pipeline in Saudi Arabia that bypasses the Strait of Hormuz and transports crude oil to the Red Sea.
The pipeline, which was attacked on September 10, has not yet been fully restored to operation. Saudi Aramco is in the early stages of restarting the pipeline, with the goal of achieving meaningful restoration by this Saturday.
Pipeline disruptions forced Saudi Arabia to divert more crude oil exports via the Strait of Hormuz.
Satellite data shows a jump in crude oil loadings in the Persian Gulf over the weekend. This concentrated sale of approximately 100 million barrels is equivalent to the total global daily demand, and traders estimate it will more than double the amount of Saudi crude oil flowing through the Strait of Hormuz to Asia compared to recent levels.
The risk of transportation shifts from the buyer to the seller.
Saudi Aramco's initiative to undertake the transportation reflects a profound shift in the Persian Gulf oil trade landscape since the outbreak of the US-Iran conflict.
In the past, oil-producing countries in the Persian Gulf typically sold crude oil on a Free On Board (FOB) basis, meaning the buyer would send their own ship to pick up the goods. However, since the outbreak of the conflict, refiners have generally been unwilling to send their own ships due to concerns about being attacked, and sellers have gradually taken on more transportation risks.
For sellers who lack independent shipping capabilities, intermediaries and traders have stepped in to fill the gap.
It is understood that TotalEnergies SE, Vitol Group, Trafigura Group, and Abu Dhabi National Oil Company are all involved in the business of transporting crude oil from the Persian Gulf, and Iraq's National Oil Marketing Company SOMO also completes exports through the aforementioned intermediaries.
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