Saudi Arabia is seeking to sell crude oil to buyers from offshore waters near Oman, indicating that the kingdom may be following the United Arab Emirates' playbook by using ship-to-ship transfers to move more oil out of the Persian Gulf and sustain export flows amid persistent disruptions to shipping through the Strait of Hormuz. According to people familiar with the matter, Saudi state-owned oil giant Saudi Aramco is offering cargoes for delivery via ship-to-ship transfer, with the delivery point located near Sohar in the Gulf of Oman. The grades being sold in this process include Arab Medium crude and Arab Heavy crude. As Saudi Arabia's medium and heavy crude grades predominantly originate from offshore fields within the Persian Gulf, these cargoes are likely transported out of the Gulf before being transferred to the Omani coast for sale. Saudi Aramco declined to comment on the matter.
In recent times, major Middle Eastern oil producers have been persistently seeking alternative transportation methods to move substantial volumes of crude from the Persian Gulf to areas beyond the Strait. Against the backdrop of rising transportation risks in the Strait of Hormuz, these additional supply channels help alleviate market concerns over a major disruption to Middle Eastern oil exports, while also curbing upward pressure on international oil prices and mitigating the risk of energy prices fueling further inflation.
Compared to other Gulf producers, Saudi Arabia had previously been relatively slower in expanding offshore transshipment, primarily due to its possession of an east-west pipeline connecting the Persian Gulf to the Red Sea. This pipeline allows a portion of its crude to be exported via the Red Sea port of Yanbu, thereby reducing its reliance on the Strait of Hormuz. However, in recent weeks, this alternative route has also faced fresh risks. Yemen's Houthi rebels have declared a maritime blockade against Saudi Arabia, casting greater uncertainty over crude exports transported via the Red Sea.
Meanwhile, recent indications point to a revival in Saudi crude loading activity on the Persian Gulf side. Satellite imagery shows that over the past week, tankers with a combined carrying capacity of at least 9 million barrels have completed loading at or near Ras Tanura, Saudi Arabia's largest crude export terminal. Saudi Arabia has also amassed a substantial number of very large crude carriers (VLCCs) in waters beyond the Gulf, providing additional shipping capacity to support further crude transshipment.
Saudi Aramco CEO Amin Nasser stated in March this year that the east-west pipeline to Yanbu primarily transports Arab Light and Arab Extra Light crude grades. In contrast, Saudi Arabia's offshore fields, mostly located within the Persian Gulf, primarily produce Arab Medium and Arab Heavy grades. This further indicates that the medium and heavy crude currently being offered near Sohar in the Gulf of Oman has likely already been transported through the Strait of Hormuz by sea.
With both the Strait of Hormuz and the Red Sea facing geopolitical risks as critical energy transit routes, Saudi Arabia's expansion of ship-to-ship crude trading near the Gulf of Oman demonstrates that Middle Eastern producers are relying on more flexible logistics and transshipment arrangements to sustain exports. Whether such crude flows that bypass traditional loading patterns can be sustained will also become a key factor influencing global crude supply and oil prices.
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