Saudi Arabia reportedly plans to finalize the oil transshipment scheme via the Strait of Hormuz to compete for market share.
According to sources, Saudi Arabia is in discussions with crude oil buyers and plans to complete crude oil loading outside the Strait of Hormuz starting next year, incorporating this arrangement into long-term supply contracts.
According to Golden Ten Data APP, insiders have revealed that Saudi Arabia is in talks with crude oil buyers, planning to start loading crude oil outside the Strait of Hormuz from next year, and include this arrangement in long-term supply contracts. This transfer model was implemented during the Iran conflict, and now Saudi Arabia hopes to make it a regular practice to gain greater market share.
Insiders stated that negotiations are still ongoing and need to be finalized before the end of this year. If the plan is approved, Saudi Arabia’s delivery model for crude exports will undergo major changes, since deliveries under long-term contracts account for the majority of Saudi supply.
The Iran conflict, which has lasted eight months, has disrupted traditional crude shipping routes, with serious interference in the Strait of Hormuz shipping. The main oil-exporting countries in the Gulf have had to adjust their operations to ensure client supply. As competition among buyers intensifies, the Hormuz Strait transshipment model has become a key mechanism to safeguard market supply: sellers bear the risks of sailing through the Strait, transferring crude to other tankers outside the Strait.
According to the aforementioned insiders, Saudi Aramco is also discussing other adjustments, including offering pricing benchmark options and even directly delivering cargo to Asian customers. No final decision has been made yet, and details such as pricing, freight, and available oil volume are still being discussed.
Both Saudi Aramco and Saudi Ministry of Energy have not responded to requests for comment regarding the negotiations.
It is understood that prior to the conflict, Saudi Aramco’s core Asian clients arranged their own tankers and picked up shipments at the Ras Tanura export terminal deep within the Persian Gulf, with shipping arrangements generally not handled by Saudi Arabia.
After the conflict erupted, some shipowners became unwilling to enter the Strait of Hormuz. Even with ample crude supply, buyers struggled to charter tankers at reasonable costs. Under such circumstances, the UAE, Saudi Arabia, Kuwait, and Iraq adopted the Hormuz transfer solution, completing crude deliveries outside the Strait through ship-to-ship transfers.
Insiders say Saudi Aramco has been supplying its three main crude grades—Arab Light, Medium, and Heavy—using this transfer mechanism.
Other sources revealed that recently Saudi Aramco has allowed some buyers to conduct ship-to-ship crude transfers offshore India. For clients unable to enter the Gulf of Oman due to safety concerns, this is a relatively safe alternative and also helps ease congestion at ports on the Arabian Peninsula.
Insiders stated that Saudi Aramco is also studying shipping arrangement plans, exploring more direct crude delivery to customers. In addition to ensuring smooth exports, such plans also allow Saudi Aramco to share in some of the gains caused by surging tanker rental prices through the Strait of Hormuz.
Sources say some Asian buyers are negotiating with Saudi Aramco to switch their long-term contract crude purchases to Brent futures pricing, replacing the current Dubai and Oman benchmark prices. This would give the Gulf oil producer more pricing flexibility.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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