Saudi Aramco Eyes Higher Prices for Asia-Bound Oil Amid Shipping Cost Hike
Saudi Aramco is reassessing its pricing mechanism for crude oil exports to Asia from Egypt's Sidi Kerir port due to increased shipping costs, according to sources. The company has been forced to divert supplies through the Suez-Mediterranean pipeline after Yemen's Houthis imposed a blockade on Saudi oil shipments via the Bab el-Mandeb strait in the Red Sea.
The Houthis' blockade led to a rerouting of exports from Ras Tanura via its east-west pipe, with Yanbu now shipping oil to Ain Sukhna in Egypt. The oil is then transported by pipeline up to Sidi Kerir, where it will be loaded for Asia-bound vessels.
This new route is estimated to increase freight costs, which could result in an additional $10 million per shipment or $5 per barrel for Asian buyers, according to one of the sources. Saudi Aramco has declined to comment on the matter.