Saudi Aramco has told at least two European refining customers they will receive no Saudi crude in October after damage to the kingdom’s East-West pipeline disrupted exports through the Red Sea.The move deprives affected refiners of contracted monthly supplies at a time when European buyers are already paying sharply higher prices for physical crude and seeking replacement barrels. The suspension follows drone attacks that forced the East-West pipeline offline and interrupted loadings at Yanbu, Saudi Arabia’s main Red Sea crude export terminal.
European customers normally receive Saudi grades under term agreements designed to provide regular monthly volumes. The October allocations for at least two buyers have been reduced to zero, and the action is understood to extend to European term customers more broadly. Saudi Aramco has not publicly detailed the allocations or issued a statement explaining the cuts.
The disruption has had an immediate impact on procurement. Poland’s Orlen, one of the biggest buyers of Saudi crude in Europe, has moved to secure additional cargoes from a wide range of suppliers to protect refinery operations in Poland, Lithuania and the Czech Republic. The company said it had purchased 16 extra cargoes for delivery through October from sources including Norway, Britain, Algeria, Kazakhstan, Azerbaijan and the Americas.
Orlen said its refineries’ crude requirements remained fully covered despite delays and cancellations affecting Saudi shipments. Aramco has been a major supplier to the group, which has progressively diversified its crude slate after ending reliance on Russian oil.
The loss of Saudi barrels has tightened a European market already contending with expensive replacement grades and constrained availability of some products. Dated Brent, the benchmark for physical crude in Europe, rose above $130 a barrel at one point this week as traders reacted to supply disruptions and heightened risks across Middle Eastern shipping routes.
Saudi Arabia is trying to offset the loss of Red Sea export capacity by increasing shipments from Ras Tanura on the Gulf coast. Aramco plans to move about 60 million barrels during September and October through ship-to-ship transfers near Sohar in Oman, equivalent to roughly 1 million to 1.5 million barrels a day.
Those shipments are primarily serving customers in Asia, including refiners in China, South Korea, Japan and India. The shift has helped restore some export flows but offers limited relief to Europe because cargoes moving west from the Gulf face longer and more difficult routes.
European refiners typically take Saudi crude through the Egyptian Mediterranean port of Sidi Kerir. Saudi barrels reach that outlet after travelling west across the kingdom through the East-West pipeline to Yanbu and then moving north through the Red Sea and Egypt’s pipeline system. The damaged Saudi line therefore directly constrains one of the main routes used to supply Europe without relying on a Gulf departure.
Aramco is working to restore the East-West system, with partial operations expected before a full return to capacity. People familiar with repair plans have indicated that a complete recovery could take about six weeks, although the timetable may change depending on damage assessments and operating conditions.
The pipeline had been carrying several million barrels a day before the attack, making it central to Saudi Arabia’s ability to redirect exports away from the Strait of Hormuz. That route has become more important during the wider Middle East conflict, which has disrupted tanker movements and raised freight and insurance costs.
Oil futures eased on Friday as additional Saudi exports through the Gulf reduced some fears of an immediate global shortage. Brent settled at $104.87 a barrel, while US West Texas Intermediate closed at $100.30, though physical European grades remained substantially more expensive.
European members of the OECD imported about 577,000 barrels a day of Saudi crude in June, according to the International Energy Agency. The October interruption therefore affects a meaningful, though replaceable, component of regional refinery supply.
Topics
Spotlight