Aramco Eyes Alternative Route for Strait of Hormuz Crude Shipments

Saudi Aramco is exploring an unusual arrangement to supply crude oil to Asian refiners without using the Strait of Hormuz, according to two people familiar with the matter. The company is in talks with select buyers about a ship-to-ship (STS) transfer off the coast of Fujairah in the UAE, which would involve Arab Medium and Arab Heavy crude cargoes for September loading.

This move mirrors an approach already deployed by Abu Dhabi National Oil Company (ADNOC), which has established a system for delivering crude to buyers without transiting the Strait of Hormuz. ADNOC has sold more than 100 million barrels of crude through this method, leveraging STS operations off Fujairah.

The disruption in the Strait of Hormuz due to fighting between the U.S.-Israel coalition and Iran, as well as vessel attacks by Yemen's Iran-aligned Houthi militants, has led many shipowners to avoid transiting the waterway. The Strait of Hormuz is a critical chokepoint through which roughly 20% of global crude shipments pass.