Asian refiners, awaiting word on Saudi shipments, expect tighter supply

NEW DELHI/SINGAPORE: Asian refiners are bracing for tighter supply of sour crude as they await guidance from Saudi Arabia on exports via the Red Sea after attacks on the East-West Pipeline, industry sources said on Monday.

Saudi Arabia shut the pipeline after it came under attack on Friday.

The shutdown helped push up oil prices by 3% on Monday.

Saudi Arabia has not said how long repairs may take and Saudi Aramco has not provided updates on supply allocations or shipment schedules, sources at several Asian refineries said.

One source said they had been notified that loading will be delayed, but wasn’t given a specific new date.

Three others said they had not been told whether cargoes loading from the Red Sea port of Yanbu would be delayed or suspended, although they expected delays in shipments and sour crude supplies to tighten.

“Getting sour crude is a challenge. We will have to pay higher prices as all will be chasing limited supplies from Iraq, UAE and others,” said one of the refining sources.

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Aramco did not respond to a request for immediate comment.

Saudi Arabia’s exports via the Red Sea had already fallen sharply in recent months.

Yanbu loadings in July dropped to between 500,000 and 1 million barrels per day from about 6 million in June after Yemen’s Houthis declared a blockade in July, ANZ analysts said in a note on Monday.

Some vessels had been recently loading at the ports with their AIS transponders switched off, making flows harder to track.

Suezmax-sized tankers Lahore and Aspen were due to load crude from Yanbu on Monday, Kpler ship tracking data showed, with at least one very large crude carrier, the Kenya B, expected to load in the next few days.

Few refiners in top buying region Asia have been willing to load there because of the Houthi blockade, or to load at Egypt’s Sidi Kerir because of the longer voyage times and higher freight costs.

“For China, the impact is indirect, as Chinese refiners have stopped loading from the Red Sea, including Yanbu and Sidi Kerir, since August,” said Emma Li, analyst with ship tracker Vortexa.

The pipeline shutdown is pushing Gulf-to-Asia tanker rates to record highs, increasing costs for Chinese refiners conducting ship-to-ship transfers for Gulf crude cargoes, Li said.