Asian Refiners Seek Alternative Shipping Routes Over Red Sea Security Concerns

Asian refiners are growing increasingly wary of collecting crude oil shipments from Saudi Aramco's Yanbu terminal on the Red Sea due to security concerns. The terminal has become crucial for Saudi Arabia as it seeks to maintain crude shipments after the war disrupted traffic through the Strait of Hormuz and severely restricted supplies from the Persian Gulf.

The situation has been complicated by a series of attacks on tankers and energy infrastructure in the Red Sea region by Iran-backed Houthi militants. This has increased risks for shipowners while adding another layer to the wider conflict in the Middle East.

At least two Asian refiners have approached Aramco to ask if their contracted crude can instead be collected from Sidi Kerir, an Egyptian port on the Mediterranean. The requests concern September cargoes covered by long-term contracts with Aramco.

The higher cost of moving crude from Sidi Kerir to Asia via a route around Africa could lead at least one of the refiners to forgo its monthly allocation, traders told Bloomberg. Some Saudi crude cargoes had already been redirected to Sidi Kerir before Aramco finalised its September sales.

Aramco asked refiners in Japan and South Korea to collect their cargoes from Sidi Kerir next month, while refiners in China, Taiwan, and India were mostly asked to take their shipments from Yanbu. Asian refiners purchase Saudi crude through long-term contracts negotiated annually, allowing them to reduce or forgo a particular month's allocation when circumstances require.