Saudi Aramco is handling September crude allocations to some of its Asian term customers on an ad hoc basis after Middle East hostilities disrupted the kingdom's exports, three sources familiar with the matter said.
The shift underscores how hostilities around the Strait of Hormuz and the Red Sea have disrupted supplies from the world's biggest oil exporter, which has left buyers uncertain whether they can secure vessels and lift their contractual volumes.
Under the usual monthly allocation process, term buyers submit their requested loading volumes to state oil company Saudi Aramco after it announces its official selling prices (OSP) at the beginning of each month. Aramco typically informs customers of their allocations around the 10th of the month.
Four Chinese buyers said this week they had not received their September allocations. Two of them and another Asian buyer said lifting volumes were instead being discussed individually with Aramco.
An Indian refining source said the refiner had received its full allocation, but the volumes were not considered firm because of uncertainty over whether it could secure vessels and lift the crude.
"Although our allocation is full, it is conditional as we don't know whether we will be able to lift the cargoes," the source said, adding that Aramco was aware of the problem.
Aramco did not immediately respond to a request for comment on its September crude allocations.
Earlier this month, Aramco further reduced its September OSP for Arab Light to Asia to a six-year low to attract demand.
Refiners traditionally buy Saudi crude on a free-on-board basis and are responsible for arranging shipments.
Refiners sources said few shipowners dare to enter the Strait of Hormuz or the Red Sea to load from Saudi's two main export ports.
The Houthis declared a maritime embargo against Saudi Arabia on July 20, opening a new front against the US and its allies in the Iran war. Since then, they have claimed attacks on Saudi-linked tankers, Yanbu oil facilities and, most recently, the Jazan refinery on the Red Sea coast.
Saudi has also offered additional crude cargoes for loading from Egypt's Mediterranean port of Sidi Kerir. But so far, Asian buyers have been reluctant to lift from Sidi Kerir given the rerouting that lengthens voyages to Asian refiners and raises freight costs.
Saudi crude shipments to Asia are closely watched by market participants as an indicator of demand from the world’s biggest oil importing region.
Last year, Saudi Arabia shipped 4.9 million barrels per day of crude to Asia, Kpler data showed. Shipments fell below three million bpd in July, although the growing use of so-called dark voyages clouds visibility into Saudi oil exports.
(Reporting by Siyi Liu in Singapore and Nidhi Verma in New Delhi; Editing by Chizu Nomiyama)