Aramco Adjusts Oil Allocations Amid Shipping Disruptions

Saudi Arabia's oil exports to Asia are facing disruptions due to shipping risks in the Strait of Hormuz and the Red Sea. As a result, Saudi Aramco is adjusting its oil allocations for Asian contract customers on an ad hoc basis for September deliveries.

The disruptions have left Asian buyers uncertain about securing vessels to transport their contracted oil volumes, with only a small number of vessel owners willing to enter the conflict zones. This has prompted Aramco to cut the official selling price (OSP) of Arab Light crude to Asia for September delivery to its lowest level in six years.

Saudi Arabia is also offering additional oil cargoes that can be loaded through the Sidi Kerir port in Egypt, but Asian buyers have so far been reluctant to take oil from this route due to extended sailing times and increased freight costs. Saudi shipments to Asia declined to below 3 million barrels per day (bpd) in July, down from around 4.9 million bpd last year.