Saudi Arabia is using an alternative shipping route to move crude to overseas buyers after disruptions at its Red Sea export terminal in Yanbu, according to a Reuters report citing several trade sources.
Around 60 million barrels of Saudi crude from the Gulf port of Ras Tanura are reportedly being redirected for loading through ship-to-ship transfers at Oman’s Sohar port during September and October.
The change in export arrangements follows an attack on the pipeline linking Saudi Arabia’s oil-producing region with the Red Sea. The disruption has affected the kingdom’s normal crude shipments through Yanbu.
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Oman becomes alternative export route
Under the new arrangement, crude is transported from Ras Tanura to Sohar, where it is transferred between vessels before being shipped to international customers.
The redirected cargoes are being purchased mainly by refiners in China and South Korea. Some shipments are also expected to reach India and Japan.
The additional crude moving out of Saudi Arabia’s Gulf terminals has helped ease global oil prices, Reuters reported. Traders are assessing whether the alternative shipments can make up for some of the supplies affected by the reduced activity at Yanbu.
Saudi crude supplies to Europe suspended
Saudi Aramco has informed at least two European refining customers that they will not receive Saudi crude next month, according to people familiar with the matter cited by Reuters.
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The reported suspension affects regular supplies to the European market following the pipeline attack and the resulting disruption to exports through Yanbu.
European countries imported approximately 577,000 barrels of Saudi crude per day before the shutdown, underscoring the importance of the affected supply route.
Export disruption changes global crude flows
The developments suggest that Saudi Arabia is attempting to keep its crude moving by shifting exports through its Gulf infrastructure and using Sohar as a transfer point.
However, the rerouting does not ensure that all traditional markets will receive their usual supplies. While Asian refiners are accessing spot cargoes redirected through Oman, European buyers are facing interruptions to their regular Saudi crude deliveries.
How India could be affected
- Crude supply: Reuters reported that Indian refiners are among the buyers of Saudi crude being transferred through ship-to-ship operations near Oman’s Sohar port. This could help maintain supplies despite the disruption at Yanbu.
- Higher freight and insurance costs: The Oman route involves additional handling and maritime risks. Freight rates for supertankers on the Fujairah–Asia route have reportedly reached record levels, which could raise the landed cost of crude for Indian refiners.
- Petrol and diesel prices: If the disruption continues or worsens, higher international crude prices, freight costs and insurance premiums could put pressure on domestic fuel prices. However, a direct price increase is not automatic, as Indian fuel prices also depend on government policy, taxes, rupee-dollar exchange rates and oil-company pricing decisions.
- Refining margins: Indian refiners may face higher procurement and transportation costs. But if Saudi Arabia maintains shipments through Oman, the supply impact could be manageable.
- Shipping risks: Much of India’s energy trade from the Gulf remains exposed to instability around the Strait of Hormuz. Reduced vessel traffic through the strait indicates that maritime risks remain elevated.
