Gulf of Oman ship-to-ship oil transfers reach limit as Saudi exports surge
USO•Ship-to-ship oil transfers in the Gulf of Oman have reached capacity limits as Saudi Arabia redirects exports through the Strait of Hormuz. Saudi crude exports via Hormuz were on track to rise to 3.6 million barrels per day in September, from about 900,000 bpd in August.
1. More tankers needed
Saudi Arabia has sold more than 60 million barrels of crude for ship-to-ship transfer off Sohar, Oman, this month and next, after an attack on its East-West Pipeline halted exports from Yanbu. The increase in Saudi shipments, alongside exports from Iraq and the United Arab Emirates, has tightened availability of very large crude carriers and raised shipping costs. Analysts estimated the higher Saudi flows would require 36 to 40 additional VLCCs; each can carry 2 million barrels.
2. Transfers face delays
Ship-to-ship transfers of crude loaded on VLCCs from ports west of Hormuz have remained around 6 million bpd since the end of August, Vortexa analysts said. An operation now takes nearly 10 days, up from five to seven days previously, and Chinese buyers have sought alternative transfer locations off India and Malaysia or direct deliveries to refineries. The daily time-charter rate for a VLCC carrying oil from the Middle East to China reached a record $1.27 million on Monday.
