Asian refiners are pushing back against Saudi Aramco's request to load oil at the Yanbu port on the Red Sea. They are concerned about safety due to recent attacks by Iran-backed Houthi militants. This has made refiners in China, Taiwan, and India reluctant to send vessels through these risky waters, according to traders who spoke anonymously.
Key Details
At least two refiners have asked to pick up their oil from Egypt's Mediterranean port of Sidi Kerir instead. This request is for cargoes scheduled for collection in September under long-term contracts with Aramco. However, one refiner may skip its monthly allocation because shipping crude from Sidi Kerir around Africa to Asia is more expensive. Traders noted that some Saudi crude shipments had already been redirected to Sidi Kerir before Aramco's September sales.
Background
Saudi Aramco had asked Japanese and South Korean refiners to collect their cargoes from Sidi Kerir as part of its September allocations. The company did not comment on the situation. Under long-term contracts, refiners agree to buy a set amount of crude each year but can choose when to take those volumes. This allows them to reduce or skip monthly allocations if necessary.
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The ongoing conflict in the Red Sea could disrupt supply for Asian refiners, especially affecting crude oil shipments. This situation may influence oil prices as refiners rethink their shipping options. Investors will be watching for updates on shipping safety and any further developments regarding the Houthi threat.
Based on reporting by: businesstimes.com.sg