Only 5 days of inventory left! Major disruptions hit Saudi Red Sea crude oil exports

As the supply risks sparked by the attack on Saudi Arabia’s oil facilities continue to escalate, the international crude oil market saw another sharp fluctuation on Tuesday evening Beijing time, with oil prices experiencing a rollercoaster ride of sharp rises and falls.

Saudi Arabia notifies European refineries to cancel September crude oil cargoes, suspends loading operations at Yanbu Port

News broke on Tuesday evening Beijing time that Saudi Arabia had sent letters to multiple European refineries informing that some crude oil transportation orders originally scheduled for delivery at the end of September would be canceled due to the closure of the east-west crude oil pipeline. Shipping news also showed that crude oil loading operations at Yanbu Port on the Red Sea had been suspended.

Market information shows that the September late crude oil shipping plans of at least three European refineries have been canceled, with delivery dates delayed until November at the latest. Another two refineries are about to receive supply adjustment notices for September. A market source warned that all Saudi crude oil tankers scheduled to be shipped in the last ten days of September face delivery risks; the current crude oil inventory at Yanbu Port can only support about 5 days of loading demand, and the inventory is running low.

Mixed news sends Brent crude oil surging to nearly $108 per barrel in short term

Stimulated by the negative news of pipeline shutdowns and cargo cancellations, the price of Brent crude oil futures briefly rose from $105 per barrel to nearly $108 per barrel. Earlier, the market had heard news that Oman was consulting with the United States to ease tensions in the Middle East. Driven by this expectation of de-escalation, international oil prices once fell significantly. Amid the game of bullish and bearish news, oil prices saw sharp intraday fluctuations.

Core oil transportation trunk line damaged by attack, may face shutdown for weeks

The root cause of this supply crisis is that the Houthi armed forces in Yemen have continued to attack Saudi energy facilities recently. In the previous attack, Saudi Arabia’s transnational east-west crude oil pipeline was forced to shut down. The pipeline, about 1,200 kilometers long, connects Saudi Arabia’s core eastern oil-producing region with Yanbu Port on the Red Sea coast, and is a key alternative channel for Saudi Arabia to export crude oil bypassing the Strait of Hormuz.

Satellite images released on Sunday show that a pumping station along the pipeline was burned down, with severe damage to the facilities. Crude oil leaked out from the rupture point and formed oil stains in the desert area. Local informed officials judged that the core east-west pipeline was severely damaged and is expected to remain out of normal operation for several weeks.

After the escalation of the Middle East conflict, this pipeline could transport about 4 million barrels of crude oil to Yanbu Port per day at its peak. After the pipeline was shut down, exports from Yanbu Port can only rely on storage inventory. Industry assessments estimate that the inventory can only support 5 to 7 days. Energy research firm Rystad Energy pointed out on Monday that since the end of August, the daily throughput of this pipeline has ranged from 2.6 million to 4 million barrels; once the pipeline completely stops transporting, the corresponding volume of crude oil will exit the global circulation market.

European refineries urgently seek alternative supplies, Poland’s PKN Orlen Group accelerates inventory replenishment

European refining enterprises have begun to respond to the risk of Saudi crude oil supply disruption. News on Tuesday morning showed that Poland’s integrated oil company PKN Orlen Group urgently turned to the North Sea and other regions to purchase crude oil to make up for the gap in Saudi crude oil supply.

Orlen Group and its subsidiaries operate multiple refineries in Poland, Lithuania and the Czech Republic. Kpler data shows that since the beginning of this year, Poland’s Gdańsk Port receives an average of 160,000 barrels of Saudi crude oil per day, and Lithuania’s Butinge Port receives an average of 63,000 barrels per day; the combined import volume of the two ports accounts for 59% of Europe’s total crude oil imports from Saudi Arabia. In addition, Orlen also imports a small amount of Saudi crude oil at Trieste in Italy to supply its Czech refinery.

Red Sea geopolitical risks continue to escalate, Asian buyers wait for clear delivery schedule

The supply pressure is still further escalating: the Houthi armed forces continue to seize islands along the Red Sea coast, which will continue to impact Saudi Arabia’s Red Sea crude oil export channels.

A source from Asian refineries said that Saudi Arabia has not yet announced the pipeline maintenance period, and Saudi Aramco has not updated its crude oil allocation plan and cargo shipping time. Some buyers have only received notices of shipping delays, but have not received a new delivery schedule, and market uncertainty remains high.