Saudi Arabia is reverting to discreet crude shipping methods through the Strait of Hormuz, having resumed significant tanker loadings after a three-week pause, while simultaneously initiating ship-to-ship transfers off the Omani coast to bypass direct strait transit risks. This strategic pivot follows the disruption of its alternative Red Sea export route, which was effectively neutralized by Houthi naval blockades.

Last week, Saudi Aramco ended the temporary halt at its Ras Tanura and Juaymah terminals within the Strait of Hormuz and recommenced crude loading operations. In parallel, the company began offering ship-to-ship sales off Omani waters, including at Sohar, specifically for Arab Medium and Arab Heavy crude grades, indicating these cargoes likely originated from within the Persian Gulf.

The collapse of the Red Sea route has forced a portion of Saudi exports to be redirected to Egypt's Sidi Kerir terminal. However, projected loadings for Asia this month have fallen dramatically to roughly 670,000 barrels per day, a stark contrast to the near 4 million barrels per day previously shipped via the Yanbu terminal.

This adjustment suggests Saudi Aramco may be emulating the United Arab Emirates by routing more tankers through the Strait of Hormuz, while using ship-to-ship transfers outside the strait to sustain export volumes. Nevertheless, the extended voyage distances and elevated freight costs pose significant challenges to the viability and sustainability of this workaround strategy.

Previously, Saudi Aramco had shifted substantial export volumes to the Red Sea's Yanbu port to circumvent risks associated with the Strait of Hormuz, at times reaching approximately 4 million barrels per day. Over the past several weeks, however, Houthi forces declared a naval blockade on Saudi Arabia, rendering this alternative pathway ineffective.

Following the blockage, Saudi Aramco pivoted to supplying from Egypt's Sidi Kerir terminal, but the monthly shipment volume to Asia is expected to be only about 670,000 barrels per day. Longer shipping distances and higher freight rates have further eroded the feasibility of this routing.

Last week marked the resumption of crude loadings at the Ras Tanura and Juaymah terminals, concluding the three-week hiatus. Three very large crude carriers (VLCCs) – the Malaysia Prosperity, Algeria Prosperity, and Singapore Prosperity – each loaded approximately 2 million barrels between August 12 and 16.

Preliminary data from Kpler suggests that up to six additional VLCCs may load Saudi crude within the strait later this month. Satellite imagery also confirms that vessels with a combined carrying capacity of at least 9 million barrels have completed loadings at or near the Ras Tanura export facility over the past week.

The resumption does not necessarily signal a return to normal export operations, as Saudi Arabia had suspended in-strait sales for several weeks following the escalation of US-Iran tensions and attacks on its tanker fleet last month.

To mitigate the perils of transiting the strait directly, Saudi Aramco is now providing ship-to-ship sales from Omani waters, including Sohar, for Arab Medium and Arab Heavy crude, implying these cargoes are sourced from inside the Persian Gulf. This move mirrors the UAE's approach of shipping more crude through the Strait of Hormuz.

Saudi Aramco continues to supply Asian refiners via ship-to-ship transfers off Fujairah, allowing buyers to collect cargoes without having their own vessels navigate the strait. Market watchers will now focus on whether VLCC loadings within the Strait of Hormuz persist and whether shipment volumes from Egypt's Sidi Kerir terminal can recover.