Tanker Rates for Red Sea-Loading Saudi Crude Plunge
Freight rates for tankers to ship Saudi crude from the Yanbu port on the Red Sea to Asia have slumped from the highs seen earlier this month, as more vessels are diverting to the Saudi export port that bypasses the Strait of Hormuz.
Tanker rates on the Yanbu-Asia route have slumped from a high of over $450,000 per day in early March to about $200,000 per day for voyage agreed this week on a 2011-built very large crude carrier (VLCC), according to sources familiar with the deals and brokerage reports cited by Bloomberg.
With the Persian Gulf-Asia route effectively closed for most crude, especially the one from Saudi Arabia, the Yanbu port has become the go-to place for tankers to remain busy in the trade to ship crude from the Middle East to its key export region, Asia.
Saudi Arabia is accelerating the shift from Strait of Hormuz to the Red Sea as commercial traffic through the strait remains near-collapse levels.
“Iran continues to enforce a controlled transit model through Hormuz, enabling selective passage via IRGC-managed corridors based on cargo type and destination,” maritime intelligence firm Windward said in a note on Monday.
With the Strait of Hormuz open only on the discretion of the Islamic Revolutionary Guard Corps (IRGC), Saudi Arabia is shifting as much of its crude exports as it can to the Red Sea route.
In the week March 15 through 21, about 22.9 million barrels were loaded at Yanbu, which was a 20% jump compared to the previous week, Windward said, citing vessel-tracking data from Vortexa.
“This acceleration reinforces Saudi Arabia’s strategic pivot toward Red Sea export routes to reduce reliance on Gulf transit corridors,” according to Windward.
Despite the pivot to Yanbu, Saudi Arabia cannot fully offset the loss of all the supply it was shipping through the Strait of Hormuz before the war.
Saudi oil giant Aramco has reportedly notified customers of term supply in Asia that they would receive in April only the flagship Arab Light grade loaded at the Yanbu export port on the Red Sea.
So far in March, Saudi Aramco has exported about 4.355 million barrels per day (bpd) of crude, according to Kpler data cited by Reuters. That’s way below the 7.1 million bpd in exports in February, before the de facto closure of the Strait of Hormuz.
By Charles Kennedy for Oilprice.com
Saudi Pushes White House to Prolong Iran War as Brent Tops $100
Saudi Arabia is publicly calling for regional stability. Peace, even. But privately, the Kingdom is pushing the White House to press on with its campaign against Iran, with oil prices comfortably above $100—a move that could very well trigger oil demand destruction.
According to multiple reports out of Washington on March 24, Crown Prince Mohammed bin Salman has been urging the Trump administration to stay the course in its campaign against Iran, framing the current conflict as a rare window to reshape the regional balance of power, worried, according to NYT sources, that a prolonged conflict could result in further attacks on Saudi oil infrastructure.
MBS has even pushed for ground operations, sources suggested.
Saudi officials have denied the allegations that MBS is lobbying the White House to take a harder stance on Iran. “The kingdom of Saudi Arabia has always supported a peaceful resolution to this conflict, even before it began,” an official Saudi statement reads.
The White House refused to comment, the NYT said.
Brent is holding above $100 per barrel, with WTI in the low $90s, as disruptions tied to the Strait of Hormuz move from risk premium into actual supply constraint. Flows through the region remain impaired, and while Saudi Arabia can reroute some barrels via its East-West pipeline to Yanbu, that system maxes out well below normal export volumes. In other words, it’s softening the blow but hardly a sufficient substitute.
The higher prices help offset budget pressures and support its aggressive spending plans tied to Vision 2030. But the same disruption driving those prices is hitting The Kingdom directly, with Iranian retaliatory strikes already targeting regional energy infrastructure. A half-finished war, the sources suggest, could open Saudi Arabian oil infrastructure up to further attacks.
Washington is weighing options that range from de-escalation to more aggressive targeting of Iranian export infrastructure, including key nodes like Kharg Island. Each carries obvious risks, including one of the biggest risks of all: sustained triple-digit prices that start to threaten demand as much as they support supply-side revenues.
Saudi Arabia’s fears go beyond oil—a prolonged war could undermine investor confidence for many of the ambitious projects in the works that would transform Saudi Arabia from oil-dependent economy to global business hub.
By Julianne Geiger for Oilprice.com
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