Saudi Oil Shift Creates Shipping Crunch in Gulf of Oman

Saudi Arabia has redirected 60 million barrels of crude oil from the port of Yanbu to the Gulf of Oman due to Houthi attacks, according to Reuters.

This shift has increased demand for very large crude carriers (VLCCs) in the region and pushed up oil shipping costs. Daily volumes on the transfer route have averaged 3.6 million barrels so far in September, compared to 900,000 barrels per day in August.

Kpler analyst Panagiotis Krontiras stated that this volume of crude requires an additional 36 to 40 VLCCs. Anoop Singh, head of global shipping research at Oil Brokerages, noted that the 2 million barrel per day increase in Saudi flows would create demand for 15 additional VLCCs for shuttle runs alone.

Due to the tightness in tanker supply, daily freight rates for VLCCs have climbed to a record high of $1.27 million as of this Monday, based on LSEG data cited by Reuters.