Indian Oil booked Saudi crude cargoes for Yanbu delivery

Indian Oil booked Saudi crude cargoes for Yanbu delivery

Saudi Aramco has instructed some Asian buyers, including Indian refiners, to load crude oil from its Yanbu terminal on the Red Sea as an alternative to the increasingly perilous Strait of Hormuz, sources reported. The move follows a sharp decline in maritime traffic through Hormuz due to escalating regional conflicts, including Iranian missile and drone strikes, which have prompted marine insurers to withdraw coverage for vessels transiting the strait. Aramco aims to divert shipments via its East-West pipeline, which has a capacity of 7 million barrels per day (b/d) after recent upgrades, to Yanbu for export according to reports. However, the port's loading capacity remains constrained, with historical throughput rarely exceeding 2 million b/d despite a nameplate capacity of 3 million b/d as data shows.

Indian Oil and other Asia-Pacific refiners are expected to receive Arab Light crude from Yanbu, though Asian markets typically prefer heavier grades. This shift may compel refineries to supplement feedstock with heavier crude from the Americas to optimize operations. Shipments from Yanbu to Asia must traverse the Red Sea and the Bab el-Mandeb strait, both of which face security risks from Houthi militants in Yemen. Meanwhile, Aramco's European clients receive Yanbu crude indirectly via Egypt's Sumed pipeline, with 560,000 b/d exported to northwest Europe and the Mediterranean in 2025 according to market analysis.

The rerouting underscores the broader disruption to global oil flows, with prices rising amid production halts and storage concerns in the Persian Gulf. While Yanbu offers a temporary solution, its limited capacity and geopolitical risks highlight the fragility of alternative supply routes.