Aramco oil exports spike after shift to Red Sea ports

• East-West pipeline running at capacity
• Analysts say it may not be sustained
• Houthi threat a further challenge

Crude tankers have begun departing Saudi Arabia’s Red Sea ports at an increased rate in recent days, as the country diverts oil exports away from the Strait of Hormuz.
Tankers tracked by AGBI, using their automatic identification system (AIS) data on the website MarineTraffic, indicate Saudi Arabia may be exporting four times as much oil through the Red Sea compared to last month.

The move brings Saudi Aramco, the world’s largest oil producer, closer to its goal of 5 million barrels per day (bpd) of Red Sea crude exports. But analysts suspect logistical limitations may prevent the company from hitting this target for a sustained period.

“We haven’t seen volumes coming out from the port meet those levels,” said Xavier Tang, senior oil market analyst at data company Vortexa. “We don’t think that it’s really possible to see volumes jump all the way. Five million barrels a day is extremely difficult.”
Following Iran’s near-closure of the strait on March 1, Aramco has sought to supplement its primary shipping route through which it exported more than 6 million bpd last year.
In response, its chief executive Amin Nasser said the company would begin pumping record amounts of crude from eastern oilfields to the western Red Sea coast, making available 5 million bpd for export, roughly 70 percent of its total pre-war shipments.

Saudi Arabia’s ability to pump oil west comes from the 750-mile (1,200km) East-West pipeline from Abqaiq in the Eastern Province to Yanbu on the Red Sea. An expansion to it completed last year allows Aramco to pump a maximum of 7 million bpd, of which 2 million is typically held back for domestic and industrial consumption.

Data from Kpler on ships leaving Saudi Arabia’s Red Sea terminals suggests exports rose to more than 4 million bpd by the start of this week, compared to about 1.1 million bpd at the beginning of February.

“It’s all depending on the repositioning of tankers from the east to west,” Nasser said on an earnings call last week, telling analysts the pipeline would hit capacity for the first time “within a couple of days”.

Since then, the pipeline has proved capable of running consistently at capacity, according to Naveen Das, a senior oil analyst at Kpler.

The issue now is whether Aramco can fill ships with crude at the rate it reaches the coast. Saudi’s Red Sea ports are capable of fast loading, Das said, although this remains untested.

“Can it actually operate at full utilisation?” she said. “It has not previously.”
Saudi Arabia typically exported just 1 million bpd from Red Sea ports prior to the disruption, according to research company Wood Mackenzie. 

The current plan means it will have to maintain four or five times that rate, something it has never attempted for a sustained period.
At least 23 very large crude carriers (VLCCs), which are capable of transporting around 2 million barrels of oil, were idling in the Red Sea on Thursday, according to AIS shipping data seen by AGBI.
A further 21 were heading in its direction, some from as far as the South China Sea, with arrivals scheduled into early April.

“The issue now would be whether vessels can get there quickly enough,” said Das, “and if there are no fresh security concerns in the Red Sea.”

Further reading:

• Aramco west coast pipeline to hit maximum capacity ‘in days’
• Fujairah’s importance grows with each day Hormuz remains closed
• Hormuz supply squeeze lifts jet fuel prices to 10‑year high

Red Sea shipping faces a potential threat from the Houthis, an armed group allied with Iran. Since late 2023, Houthi attacks on shipping passing through the Bab al Mandab Strait at the end of the Red Sea resulted in a drop in traffic to less than half of previous volumes.
The Houthis have not yet entered the current conflict and have refrained from attacking ships in the strait since September last year. Nevertheless, vessel operators remain wary.

AIS data shows that about 90 percent of crude tankers leaving Saudi Red Sea ports in the past week were bound for Asia, requiring passage through Bab al Mandab.

Christopher Haines, head of oil at data company Energy Aspects, said the perpetual Houthi threat will prove a further challenge to rerouting exports to the Red Sea.

“Some buyers are also concerned about shipments passing through Bab al Mandab, so will be cautious,” he said. “Although a lot of ships are signalling Yanbu pick-ups.”