Bahri’s VLCC vessels begin loading their crude at the largest oil port in the world after a hiatus of four months following a possible attack on an oil tanker by Iran in the vicinity of Oman, which forced the British Navy to call off its escort mission at Hormuz.
SINGAPORE: Saudi Aramco resumed loading crude oil at the Ras Tanura oil export terminal, which is the world’s largest oil export terminal, on Friday following almost four months of suspension, as per the shipping data released by LSEG. However, that day witnessed Iran firing a cargo vessel attempting to pass through the Strait of Hormuz as well as the British navy suspending their escort operations.
Implications of the restart of Ras Tanura for the international oil market
Prior to the outbreak of the war and closure of the Strait of Hormuz, the Ras Tanura port of Saudi Aramco had been exporting over 5 million barrels per day. Also, Ras Tanura has the largest refinery within Saudi Arabia with a capacity of 550,000 barrels per day that the Saudis have suspended due to safety concerns as a result of the ongoing war. As recently as March 8th, Aramco had its last successful loading of a shipment for China from Ras Tanura before the Iranian blockage led to the complete Saudi Aramco oil exports to Yanbu on the Red Sea.
Regional supply recovery currently under way
Saudi Aramco oil exports, according to Rystad Energy, is estimated to have returned 2 million bpd to the world market in a matter of three weeks only. Meanwhile, Iraq’s SOMO and Qatar have both offered crude tenders on Friday; other Gulf countries have included Kuwait and UAE, with Iran bringing two empty VLCCs –Natsumi and Halti– to the Gulf region.
“Two million barrels a day came back online in three weeks, and the recovery is spread across the region. The supply picture is clearly improving.” Aditya Saraswat, Rystad Energy MENA Research Director
- Saudi Arabia: Ras Tanura restarts for first time since March. Two Bahri VLCCs loading, one more waiting.
- Iraq: SOMO issues crude tender following Kuwait and UAE moves to resume Gulf exports.
- Qatar: Issues crude tender, signalling confidence in near-term Hormuz transit stability.
- Iran: Two empty VLCCs enter the Gulf to load oil after Washington temporarily lifts sanctions.
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Gulf restoration seen fully completed this year by Rystad
In mid-June, according to Rystad Energy, the production cutback due to shutdowns in the Gulf dropped from 11.7 million bpd three weeks earlier to 9.6 million bpd. This scenario sets a realistic expectation for the market to factor into pricing if the political atmosphere helps out.
The risk that clouds all other risks Iran’s attack on Hormuz
The restart at Ras Tanura came after new incidents of concern. A commercial ship claimed that it was subject to an attack while passing through the Strait of Hormuz close to Oman. The UK Maritime Trade Organization (UKMTO), part of the British naval force, suspended its escort mission because of the incident. US officials have confirmed to Reuters that Iran has launched an attack against the commercial ship.
Oil prices decline due to increase in supply following Saudi Arabia’s successful counterattack
World oil prices tumbled by over one dollar a barrel on Friday, amid resumption of Saudi Aramco Ras Tanura loadings and increased shipping from the Hormuz to their highest level since the outbreak of hostilities – rising for a while after the attack announcement only to be dragged back by the impact of supplies again. The overall trend is indicative of how things stand in the market right now: the balance tips in favor of supply gains over attacks.
Nayab Fatima is a university graduate and an emerging media professional with a strong passion for journalism, research, and independent reporting. She specializes in developing well-researched, fact-based, and analytical news stories covering a wide range of sectors, with particular expertise in technology, telecommunications, aviation, and the automobile industry.
