Saudi Aramco considers new pricing for Sidi Kerir oil exports to Asia, sources say

SINGAPORE: Saudi Aramco is considering a new pricing mechanism for crude loading from Egypt’s Sidi Kerir port for Asia to reflect higher shipping costs after re-routing exports through the Suez Mediterranean pipeline, three sources with knowledge of the matter said on Tuesday.

Saudi Aramco declined to comment.

Yemen’s Iran-aligned Houthis imposed a naval blockade on Saudi oil shipments through the Red Sea’s Bab el-Mandeb strait last week, forcing the world’s top exporter to divert more supply for exports via Egypt.

Since the start of the US-Iran war which prevented ships from entering the Gulf via the Strait of Hormuz, Saudi Aramco has been exporting most of its crude from the Red Sea port of Yanbu to Asia, diverting supply from Ras Tanura using its east-west pipeline.

The Yanbu cargoes are sold to term customers based on its monthly official selling price (OSP) for Asia plus a pipeline fee.

Following the Houthis’ threat, Saudi Aramco will now ship oil from Yanbu to Egypt’s Red Sea port of Ain Sukhna which is then carried by the Suez-Mediterranean Pipeline to Sidi Kerir.

Houthis say they don’t seek to close key Bab al-Mandeb Strait

With the latest diversion, the producer could adjust its pricing to take into account higher freight costs and a longer route via the Mediterranean and Gibraltar and then around the Cape of Good Hope, another three sources said.

One of the sources estimated that this could cost Asian buyers about $10 million extra per shipment, or $5 a barrel.