Saudi Arabia’s oil exports through its Yanbu port on the Red Sea are projected to reach a record high of 3.8 million barrels per day in March after the U.S.-Israeli war on Iran virtually cut off exports via the Strait of Hormuz, Reuters reported on Wednesday. The Kingdom can pump up to 7 million barrels per day through its East?West pipeline, of which 5 mb/d are available for export.
Saudi Arabia has been using drag-reducing agents (DRAs) to speed up oil flows to Yanbu and mitigate loss of exports through Hormuz. DRAs are friction-reducing chemicals capable of boosting flow rates by 30% or more.
Aramco has offered long-term customers, particularly in Asia, the option to receive deliveries through Yanbu to bypass the Persian Gulf. A growing armada of supertankers has been reported waiting off the Red Sea coast to collect these rerouted cargoes as the kingdom tests its western export infrastructure to its limits.
Commodity experts at Standard Chartered have estimated that 7.4-8.2 million barrels per day (mb/d) of supply is currently offline after the Hormuz blockade, with Saudi Arabia estimated to have lost 2.0-2.5 mb/d, 2.9 mb/d by Iraq, 0.5-0.8 mb/d by the UAE, 0.5mb/d by Qatar and 0.5 mb/d by Kuwait.
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StanChart also estimates that Iranian production is 1 mb/d lower than pre-conflict volumes, based on reductions in gas flaring. The energy experts say that all exports that can be diverted from the Strait of Hormuz have been.
Still, Saudi Arabia faces significant risks when exporting oil through the Red Sea, primarily as a result of escalating regional conflicts that have forced a shift away from the Strait of Hormuz.
Most oil exported from the Red Sea port of Yanbu is loaded onto Very Large Crude Carriers (VLCCs) that are too large for the Suez Canal. This forces them south through the Bab el-Mandeb Strait, where they are highly vulnerable to Houthi drone and missile attacks.
By Alex Kimani for Oilprice.com
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