Europe Sees Significant Cut in Saudi Oil Supplies After Pipeline Shutdown

Saudi Arabia's oil exports to Europe have been severely impacted after a drone attack forced the shutdown of the kingdom's East-West pipeline. Aramco, the world's top oil exporter, has informed at least two European oil refining customers that they will receive no crude oil deliveries next month.

The decision affects all European buyers under term contracts that ensure steady monthly deliveries. This is a significant blow to European refineries as Saudi Arabia is Europe's fifth-largest oil supplier, having provided almost 30 million tons of oil to the continent in 2023.

However, Saudi Arabia has increased exports from its Gulf port of Ras Tanura, inside the Strait of Hormuz, according to Reuters. Aramco has sold roughly 60 million barrels of crude for loading via ship-to-ship transfer at the Omani port of Sohar this month and next, lifting Gulf exports to an average of 1 million to 1.5 million barrels per day.

The increased Gulf exports have benefited Asian buyers even as supertanker freight rates hit records. The rate to charter a very large crude carrier to load 2 million barrels in early October from Fujairah to Asia reached 800 on the Worldscale index, according to a shipbroking firm.