Saudi Oil Exports Booming Despite Attacks

SUBSCRIBE SEARCH ARTICLES NEWS Saudi Arabia's oil exports are holding near wartime highs this month despite a wave of attacks on the kingdom's energy infrastructure, according to preliminary data from ship-tracking firms. Image by yamonstro via iStock

Saudi Arabia’s oil exports are holding near wartime highs this month despite a wave of attacks on the kingdom’s energy infrastructure and an increase in reported Iranian strikes on tankers in the Strait of Hormuz, according to preliminary data from ship-tracking firms.

The Saudis have shipped a total of 6.5 million barrels a day so far in October from the west and east coasts, compared with 6.6 million all of last month, according to data provider Vortexa. Tankertrackers.com estimates overall exports are at prewar levels of 6.99 million barrels a day so far in October, while Kpler has it at 5.4 million a day, lower than in September.

The numbers reflect the general trend of exports from the Persian Gulf region nearing levels from before the conflict. But the difference between the data — primarily because tankers are now switching off their satellite transponders to obscure their location and minimize risk of attacks — poses a challenge for traders and investors in getting a clearer picture for exports from the region that’s crucial for setting prices globally and gauging availability.

For Saudi Arabia, exports started picking up after it ramped up shipments through the Strait of Hormuz following a shutdown of the East-West pipeline after an attack last month. The link’s resumption has now opened up both the Red Sea and Hormuz routes, helping the kingdom benefit from oil’s wartime price surge while fighting off waves of attacks from Yemen’s Houthi militants. 

Higher oil revenue is taking on even greater significance for the country as strikes on airports and oil installations in recent week hit air travel, effectively shut Riyadh’s financial district and put a spotlight on the kingdom’s economy.

Aramco has increased Red Sea exports, mainly from the port of Yanbu, to 2.5 million barrels a day so far this month, up from 2.4 million in September, according to the Vortexa data. Exports through the Persian Gulf ticked lower to 4 million barrels a day from 4.2 million in September, amid repeated attacks interrupting flows. Kpler reported lower volumes from both coasts.

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Aramco has asked some Asian buyers to resume collecting oil from Yanbu from November for the first time in three months, according to people familiar with the matter. Those buyers had earlier been collecting their oil from an Egyptian port on the Mediterranean that can be served by shuttle tankers and a pipeline link, saving them the voyage into the Red Sea amid heightened Houthi threats.

Europe Sales

Aramco has also been telling European buyers who previously had contracted loadings canceled that they could bid for cargoes on a spot basis for this month and next to make up for missed volumes, Bloomberg reported.

The higher Saudi shipments come alongside greater flows from elsewhere in the Persian Gulf. Kuwait, entirely dependent on the Strait of Hormuz, is exporting as much as it was before the war, while Iraq’s shipments last month were approaching pre-conflict levels. The United Arab Emirates, one of the most successful in moving tankers through the waterway, has pushed its production to record-high levels, according to the International Energy Agency.

Saudi Arabia has told the Organization of Petroleum Exporting Countries that it boosted output by a third in September to over 8.3 million barrels a day, a wartime high. Domestic refineries typically consume about 3 million barrels a day, excluding the 400,000 barrel-a-day Jazan facility which has been shut following Houthi attacks.

The strong flows from the region have helped ease some pressure on the prices of physical supply from the region. The Oman-Dubai crude differential, a measure of the strength of the market for real-world Gulf barrels, slipped to the lowest since July earlier this month and was at around $6 a barrel on Tuesday, compared with almost $34 in September, according to assessments from General Index.

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