State-owned Saudi Aramco is preparing to introduce a separate official price for oil shipped to Asian buyers from the Mediterranean port of Sidi Kerir in Egypt. This adjustment in pricing policy is driven by the escalation of attacks by Yemen's Houthi rebels in the Red Sea, leading shipowners to avoid the Saudi port of Yanbu. Previously, Riyadh rerouted significant volumes of exports to Yanbu via the East-West pipeline due to the effective blockade of the Strait of Hormuz amid the conflict with Iran. However, further transit of vessels through the Bab-el-Mandeb Strait has become too dangerous.
The delivery route for oil from the Mediterranean to Asia requires tankers to navigate around Africa via the Cape of Good Hope, resulting in a sharp increase in freight costs and extended delivery times. Consequently, Asian refiners, including companies from China, India, and South Korea, are requesting substantial compensatory discounts from Saudi suppliers. Notably, state-owned refineries in India are seeking discounts of $5 to $10 per barrel on oil from Sidi Kerir compared to standard prices from Yanbu for August and September deliveries.
Details of the new pricing mechanism have yet to be finalized, and Saudi Arabia is considering alternative logistics options, including direct delivery of crude to Asian clients using its own resources or organizing ship-to-ship transfers after navigating through risky areas.
