Saudi Arabia floods Asia with oil as supply fears intensify

Picture Credit: India Times

Saudi Arabia has moved aggressively to reassure Asian oil buyers, selling almost 100 million barrels of crude since the middle of last week as refiners across the region face a growing supply squeeze. The sales, covering deliveries for October and November, are destined for customers in China, India, Japan and South Korea and amount to roughly a day of global oil demand. The surge has more than doubled recent Saudi crude flows to Asia through the Strait of Hormuz.

The unusual push comes after an attack disrupted Saudi Arabia’s East-West pipeline, which normally allows the kingdom to move oil to the Red Sea without passing through the Strait of Hormuz. Although the pipeline has since restarted, it is operating below full capacity, forcing Saudi Aramco to rely more heavily on Gulf terminals. Reuters reported that flows through Hormuz had risen sharply, with Aramco loading millions of barrels at Ras Tanura for shipment to Asian markets.

For Asian refiners, the additional Saudi crude arrives at a critical moment. Iranian oil flows have been severely disrupted, while some buyers are becoming increasingly cautious about Russian supplies because of geopolitical risks. That has intensified competition for crude from alternative producers stretching from Africa to Latin America. Japan’s refiners have already been working to secure supplies through November, while China, India and South Korea remain among the key destinations for Saudi barrels.

Saudi Aramco is also taking an unusual step to make the shipments easier to execute. Traders say the company is offering to manage logistics and transport the crude all the way to Asian customers, effectively taking on shipping risks that traditionally have been carried by buyers. That matters because tanker availability has tightened sharply and freight costs have surged as vessels face heightened risks around the region. Ship-to-ship transfers near Oman have also become an increasingly important workaround for Gulf producers trying to keep oil moving.

The Saudi strategy highlights how the Middle East conflict is reshaping not only where oil comes from, but who bears the cost and risk of moving it. The kingdom is using its production capacity, shipping networks and alternative export routes to keep Asian customers supplied even as traditional infrastructure remains disrupted. The nearly 100 million barrels now committed to Asia may prevent an immediate supply crunch, but the fact that so much additional effort is required to move the world's most important commodity shows how fragile global oil logistics have become.