After the Saudi pipeline attack, Gulf exports expanded: seven super tankers loaded 14 million barrels; Brent crude breached $100 intraday while WTI fell over 6%.

On September 13, drone attacks forced Saudi Arabia to shut down its east-west oil pipeline, halting all crude loading operations at the Yanbu port on the Red Sea coast. Yet, within less than a week, Saudi Aramco completed a large-scale rerouting of its export flows—a speed that exceeded the expectations of some market participants. According to data from Vortexa cited by Reuters, Saudi crude loading volumes via the Gulf route averaged approximately 3.7 million barrels per day since September 12—up from about 2.9 million bpd earlier this month. Meanwhile, average loading volumes via the Red Sea route stood at roughly 3.9 million bpd between September 1 and 11. In a report released last Friday, JPMorgan analysts noted that satellite data showed Saudi crude flows through the Strait of Hormuz had risen to an average of 2.9 million bpd over the past six days—up sharply from just 700,000 bpd in August. The loading of approximately 14 million barrels in a single day last Sunday further confirmed Saudi Arabia’s swift ability to shift export focus toward Gulf ports—and signaled that the duration of this supply disruption may be shorter than the market’s previously most pessimistic forecasts. Oil Price Retreat: Geopolitical Premium Erosion Meets Diplomatic Expectations Brent crude briefly fell below $100 intraday, driven by two converging forces: improved supply expectations following partial restoration of Saudi exports, and the unwinding of geopolitical risk premiums amid renewed diplomatic prospects between the U.S. and Iran. Bob Yawger, Director of Energy Futures at Mizuho, remarked: “Just days ago, the possibility of U.S.-Iran talks seemed extremely remote—this is a step in the right direction.” According to Al Jazeera, Iran has conveyed conditions for resuming negotiations through mediators, a point confirmed by Iranian security chief Mohsen Rezaei. Notably, actual conflict in the Middle East has not ceased: Yemen’s Houthi movement claimed attacks on Saudi Aramco facilities in Riyadh and the Red Sea city of Yanbu, and continues advancing military operations along the Red Sea coast. A report published last Thursday, September 17, citing Iranian sources, stated that after Saudi Arabia sought assistance, a major power had asked Iran to help rein in the Houthis. Geopolitical uncertainty remains—but current market pricing has shifted its focus from risk premiums toward supply recovery expectations. Sales Strategy Shifts Eastward: Asian Refiners Benefit, European Supplies Tighten Following the pipeline disruption, Saudi Aramco adjusted its sales strategy markedly: canceling some crude cargo sales to European customers and instead increasing shipments loaded at eastern ports along the Strait of Hormuz destined for Asian markets. As reported by media last week, citing trade sources, Saudi Arabia will sell around 60 million barrels of crude from the Ras Tanura port this month and next, with deliveries completed via ship-to-ship transfers at Sohar Port in Oman. This arrangement means Asian refiners will receive more abundant supplies of Saudi crude, while European buyers face temporary supply tightening—forcing them either to seek alternative sources or absorb spot premium pressures. For Asian refiners, the arrival of additional Saudi supply coincides with falling oil prices, easing procurement cost pressure. However, the ship-to-ship transfer delivery method also introduces greater logistical complexity and uncertainty regarding port arrival timing.

Cutting off Europe! Saudi crude redirected to Asia; tankers earn $8 million per day.

According to Italian news reports on September 19, the Italian government plans to deploy up to four naval vessels to the Bab el-Mandeb Strait to safeguard maritime navigation. With its oil pipeline damaged and European supply suspended, Saudi Aramco pivoted its sales strategy—‘switching routes to sell oil’—by redirecting its flagship crudes—Arabian Light, Arabian Medium, and Arabian Heavy—to Asian countries via exports through the Strait of Hormuz. Sources indicated that Saudi Aramco has already sold approximately 60 million barrels of crude, scheduled for ship-to-ship transfers at Sohar Port in Oman this month and next. Chinese and South Korean refiners are the primary buyers of these spot cargoes, with additional volumes destined for India and Japan. Satellite data shows that over the past six days, Saudi Arabia’s daily oil throughput via the Strait of Hormuz reached 2.9 million barrels—far exceeding the 700,000-barrel daily average recorded in August. Ship-to-ship crude transfers conducted in the Gulf of Oman serve as a critical mechanism enabling Saudi Arabia to sustain exports: smaller vessels transport crude through the Strait of Hormuz, then transfer it to larger tankers anchored outside the strait—thereby avoiding the risk of attacks on massive vessels entering the Persian Gulf. According to CNBC’s reporting citing vessel-tracking data, such transfer volumes have surged from 1.5 million barrels per day in August to 2.7 million barrels per day. The surge in Gulf exports is a major boon for Asian buyers—with Japan among the most significantly affected. On September 17, the Japan Petroleum Association stated that domestic refiners have secured sufficient crude supplies through the end of November, crediting ship-to-ship transfers conducted outside the Strait of Hormuz. Shunichi Kito, President of the Japan Petroleum Association, noted that in certain cases, Saudi Arabia assumes the risk of transporting crude across the Strait of Hormuz before transferring it to Japanese-bound vessels outside the Gulf—meaning Saudi crude supply to Japan has not been fully interrupted. Consequently, freight rates for large tankers bound for Asia have recently hit record highs. One calculation found that Very Large Crude Carriers (VLCCs) sailing the Middle East–China route now generate daily earnings of approximately $1.2 million (roughly RMB 8 million). Annualized, that equates to over $400 million per vessel.

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FAQ