TODAY: Gulf oil exporters face different limits to their workarounds

Good morning, nice people. We’re starting the week on a relatively quiet note — or at least, as quiet as logistics gets these days.

Last week we introduced Bottleneck Watch. Today, we’re looking at how Gulf producers are trying to work around export bottlenecks, with decidedly mixed results. Saudi Arabia’s Red Sea route is actually losing traffic as shipping risk squeezes the onward journey, while the UAE’s Murban crude is commanding a steep premium as Asian refiners compete for supplies. Iraq is getting more barrels out — but its own scramble for alternative export routes underlines just how tied its recovery still is to the one waterway everyone is trying to avoid.

MEANWHILE- The General Authority for Alexandria Port confirmed it has no plans to sell its 7.63% stake in the EGX-listed port operator to AD Ports’ Black Caspian Logistics — putting the full 43.9% state bloc on record as a united ‘no.’

And the pressure isn’t stopping at the export routes. It’s now reaching the vessels themselves. US and Iranian forces fired at vessels in the waters around Iran over the weekend: the US struck three Iranian oil carriers, destroying one and disabling two more, while Iran says it targeted three tankers taking “unauthorized routes” through Hormuz, plus several US naval drones. Commercial traffic through the strait has all but vanished — Kpler data puts Saturday’s crossings in the single digits.

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Refining down the import bill

Egypt’s Oil Ministry is expanding its push into refining and petrochemicals, and raising the bill it’s willing to spend to get there. The ministry has lifted its investment target for refining and petrochemical projects to around USD 5.2 bn from about USD 4 bn. It has also added two new projects to the plan, aiming to cut what the country spends importing diesel and butane, a government source tells EnterpriseAM. The plan pairs revamps and debottlenecking at existing refineries with new units for diesel and higher-value products, the source says.

The target is the import bill. The ministry wants to cut petroleum-product imports — excluding gas and crude — to USD 3.6 bn this year from USD 6.2 bn in FY 2025/26, according to a government document EnterpriseAM has seen.

Now the money question. To fund the new refining capacity, the government wants private investors in. It’s looking to raise some USD 2.1 bn for plants that would convert fuel oil into diesel, gasoline, naphtha, and other products, Asharq Business reports, citing an unnamed government official. The Egyptian General Petroleum Corporation (EGPC) plans to set up a separate investment company with private investors to build them and has fielded preliminary approaches from Arab and international companies — though none have firmed up into a serious offer, per the news outlet.

All eyes on Pakistani ports

Aramco, KPC eye Pakistani ports: Saudi Aramco and Kuwait Petroleum Corporation (KPC) are among the companies considering bonded storage facilities at Pakistan’s Karachi and Gwadar ports, Arab News reports, citing Pakistani officials and industry sources. Vitol and Trafigura are also reportedly interested, with companies weighing both the use of existing tanks and the construction of new terminals.

A resilience strategy: The facilities would allow energy companies to hold crude and refined products outside Hormuz, reducing the risk that inventories stored at Gulf hubs become stranded during a disruption. A source working in an energy firm said his company currently holds crude, refined products, and bunkering fuels worth bns of USD in the UAE, Bahrain, and elsewhere in the Gulf, and is weighing moving some of that inventory to Pakistan.

How bonded storage works: Suppliers would retain ownership of the fuel while it sits in customs-controlled tanks, deferring duties until it enters the Pakistani market or is re-exported, allowing energy giants to use the terminals as regional inventory and trading hubs rather than domestic storage for Pakistan.

BACKGROUND- Aramco and Kuwait’s KPC already store crude in South Korea under separate KNOC agreements, both in Ulsan, with Seoul holding emergency purchase rights over the barrels. In Japan, Adnoc holds a joint crude-storage arrangement, while Saudi Arabia and the UAE are separately pushing to expand Japan-based stockpiles roughly tenfold from 8 mn bbl. Adnoc also agreed with India to nearly triple its storage there to as much as 30 mn bbl.

Scaling into headwinds

Menzies Aviation is chasing a bigger Gulf footprint: The Agility Global-owned group handler is eyeing expansion in the UAE and Saudi Arabia, with Kuwait also a potential future market, The National News reports, citing the company’s CEO Hassan El-Houry. Syria is also under consideration as its aviation market reopens, while Menzies plans to continue expanding in the US, where its footprint has doubled over the past two years to 108 airports.

Why this matters: Menzies is still pressing the accelerator even as its airline customers squeeze the cost base. El-Houry says Gulf carriers have restored their networks to roughly 90% of prewar levels, but higher fuel costs and operational uncertainty are pushing airlines to cut weaker routes and revisit supplier contracts. The company itself describes its overall growth as aggressive, with 2Q revenue rising 31% y-o-y to USD 908 mn, helped by new contracts and its USD 305 mn acquisition of US aviation services player G2.

Pairing up on industrial zones

Egypt and Oman are studying plans to build twin industrial zones — one in each country — modeled on Egypt’s industrial-developer model, according to a statement by the Industrial Development Authority (IDA). The two sides are still working out which sectors would anchor the proposed zones, with a broader aim to support industrial integration and trade between the two markets.

This is a sign Cairo’s zone playbook could become an export in its own right. Under an industrial-developer model, private developers (rather than the state) handle the development and management of industrial land — an approach the government has been deploying in new specialized industrial zones at home. Egypt currently runs 26 such zones through 12 private developers across c. 40 mn sqm, according to the IDA.

REMEMBER- Egypt and Oman have been looking at ways to link their industrial footprints more closely, exploring a Sokhna-Sohar supply-chain link late last year, including logistics infrastructure and joint industrial activity that could channel Omani raw materials into Egyptian manufacturing.

Market watch

Oil prices rose this morning as US-Iran strikes raised fears of prolonged Middle East supply disruptions, Reuters reports. Brent crude futures climbed USD 0.79 to USD 97.07 / bbl by 05.12 GMT, while West Texas Intermediate (WTI) increased USD 0.80 to USD 92.28 / bbl.

The Baltic Index edges higher: The Baltic Exchange’s dry bulk index — which tracks rates for the capesize, panamax, and supramax vessel segments — rose 4% to 3,628 points on Friday. The capesize index climbed 6.4% to 6,427 points, while the panamax slipped 0.4% to 2,448 points. The smaller supramax edged up 0.4% to 1,675 points.

The Drewry World Container Index held steady at USD 4,465 per 40-ft container last week, according to the latest index readings. Transpacific rates strengthened — Shanghai-Los Angeles went up 5% and Shanghai-New York rose 3%. Asia-Europe lanes moved the other way, with Shanghai-Genoa down 10% and Shanghai-Rotterdam down 5%. Shipping flows remain under pressure on several fronts — attacks on commercial vessels continue to disrupt Hormuz, Chinese ports are grappling with congestion following Typhoon Saudel and other recent storms, while Panama Canal drought restrictions are set to cut daily transits to 34 in early September and 32 later in the month.

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