Saudi Arabia has signaled to Asian refiners that they can soon resume picking up crude oil from the Red Sea port of Yanbu. This development comes after the kingdom's vital East-West pipeline, which transports oil across the country to Yanbu for export, was shut down due to drone attacks on September 13. The closure initially left Asian oil refiners awaiting clarity on cargoes and bracing for tighter supplies of sour crude.
Following the pipeline shutdown, Saudi Aramco pivoted to selling approximately 20 million barrels of crude to Asian refiners for pick-up from outside the Strait of Hormuz in September and October. This involved increasing oil loadings from inside the Persian Gulf, with observed supertanker capacity reaching 14 million barrels, the highest since June. Japanese refiners, in particular, stepped up purchases of Middle Eastern oil due to heightened concerns over prompt supplies.
The ability to resume loadings from Yanbu suggests that Saudi Arabia has either repaired the pipeline, implemented alternative transport methods, or is confident in its capacity to deliver crude to the Red Sea terminal. This news will likely alleviate some concerns among Asian buyers who were anticipating supply disruptions and potentially higher prices for sour crude, a type of oil preferred by many Asian refineries.
