Aramco lines up new European routes and reworks its Asian contracts to cut reliance on Hormuz

Saudi Arabia is redrawing its oil-export map. The war exposed how much of the Kingdom’s crude leans on the Strait of Hormuz, and Aramco and the government are now moving on two fronts to route around the chokepoint: opening new corridors to carry oil overland to Europe, and rewriting how Aramco ships and prices the crude it sells to Asia.

The Kingdom is scouting new ways to get oil to Europe, eyeing export corridors through Syria and Turkey, and another via Iraq and Syria, the Economy and Planning Ministry’s chief economist Yaser Faqih said at the Milken Institute’s Asia Summit, Asharq Business reports.

It’s doing so with flows fully recovered. Production and exports are back to pre-war levels, Faqih said. September exports neared pre-war volumes on heavier Hormuz shipments, even with the East-West pipeline down for most of the month, per Bloomberg tanker data.

REMEMBER- Aramco CEO Amin Nasser said late last month the company was studying two additional crude-export corridors to strengthen network redundancy, without specifying routes. TotalEnergies CEO Patrick Pouyanné has since said Saudi Arabia has “begun to work” on a crude pipeline to Oman’s Indian Ocean port of Duqm, AGBI reports. This possibly offers a clue to the Kingdom’s wider search for alternatives.

AND- Aramco will deliver full November crude allocations to European refiners, reversing the cutoff that wiped out its October shipments to the continent after a drone attack knocked the East-West pipeline offline, Bloomberg reports, citing people familiar with the matter. At least three refiners confirmed they will receive complete volumes.

IN CONTEXT- The pipeline restart is what makes it possible. European barrels cross the Kingdom to Yanbu, then move via Egypt’s Sumed pipeline to Sidi Kerir on the Mediterranean, a route that went dark when the East-West pipeline was hit. Aramco cut European term customers off for October while routing more barrels through Hormuz toward Asian buyers, leaving refiners to search for replacements. Poland’s Orlen, which draws some 40% of its oil from Aramco, bought several cargoes in spot tenders and issued more than 10 replacement tenders.

Beyond the routes, Aramco is reworking the terms of sale. It’s in talks with customers to offer crude loadings outside Hormuz under its 2027 long-term contracts, potentially turning a wartime workaround into a formal export option, Bloomberg reports, citing people familiar with the discussions. Pricing, freight terms, and eligible volumes are still being negotiated, with no final decisions made and a year-end target to wrap up talks.

The talks go beyond formalizing Aramco’s ship-to-ship shuttle. The oil giant already carries barrels through Hormuz and hands them off outside the strait. Now it’s exploring arranging the shipping itself to deliver more crude directly to customers, potentially all the way to Asia. That would reverse the pre-war model, in which buyers sent their own vessels, and could let Aramco capture some of the windfall from soaring charter costs.

Pricing could shift too: Some Asian buyers are discussing pricing long-term purchases against Brent futures instead of Dubai and Oman benchmarks, the sources said. Long-term contracts make up the bulk of Saudi supply, so any change to their terms would reach most of the Kingdom’s crude.

REMEMBER- Aramco sold around 60 mn barrels from Ras Tanura for ship-to-ship transfer off Sohar across September and October, and was weighing price reductions of c. USD 9 / bbl to offset higher freight costs.