Aramco may start shipping its own crude to Asia under 2027 contracts that load outside Hormuz

Aramco is in talks with customers to offer crude loadings outside Hormuz under its 2027 long-term contracts, and could ship it to Asian buyers itself, Bloomberg reports, citing people familiar with the discussions. Long-term contracts make up the bulk of Saudi supply, so the agreement would turn a wartime workaround into the standard way the Kingdom sells the bulk of its crude.

Before the war, buyers sent their own tankers: The oil giant already carries barrels through Hormuz and hands them off outside the strait in a ship-to-ship shuttle, and arranging the full voyage could let it capture some of the windfall from soaring charter costs.

The terms are still open, and the benchmark could change too: Pricing, freight terms, and eligible volumes are still being negotiated, with a year-end target to wrap up talks. Some Asian buyers are discussing pricing long-term purchases against Brent futures instead of Dubai and Oman benchmarks, the sources said.

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.

European refiners get their full allocations back next month: 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- European barrels cross the Kingdom to Yanbu, then move via Egypt’s Sumed pipeline to Sidi Kerir on the Mediterranean. When the East-West pipeline went down, Aramco cut European term customers off for October and sent more barrels through Hormuz toward Asian buyers/ 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.