Saudi Oil Crisis Deepens as Aramco Suspends Yanbu Loadings
Saudi Aramco has suspended crude loadings from its Red Sea port of Yanbu after halting flows on the East–West pipeline, a move that lifted ICE Brent back to about $108 per barrel. The supply squeeze is occurring alongside stronger-than-expected regional demand, sending Asian crude differentials and futures — including a Shanghai Futures Exchange contract that reached $138/ barrel — toward record levels.
Why It Matters
The Yanbu suspension and the East–West pipeline outage tighten Middle Eastern export routes and force more crude to transit the Strait of Hormuz under much higher freight and insurance costs, amplifying price pressure across global benchmarks and putting stress on Asian refiners reliant on Red Sea cargoes.
Key Facts
- Aramco action: Suspended Yanbu oil loadings after halting the East–West pipeline
- Brent price: ICE Brent returned to about $108 per barrel
- Shanghai futures: Futures on China’s Shanghai Futures Exchange rose to $138 per barrel (record)
- Asia demand outlook: Asia expected to see crude demand dip by 1.5 million b/d this year
- China refinery runs (August): Crude throughput rose 11% month-on-month to 13.9 million b/d; inventories drawn down by 639,000 b/d
Saudi Aramco’s confirmation that loadings from the Red Sea port of Yanbu have been suspended — following an earlier shutdown of the country’s East–West pipeline — has tightened supply routes and pushed ICE Brent back toward $108 a barrel. The pipeline halt, first reported amid rumours of strikes and visible satellite flumes, removed a major wartime outlet and prompted officials to try to route more volumes via the Gulf and the Strait of Hormuz.
The disruption has added to an emerging Asian supply squeeze just as regional demand has proved firmer than expected. Chinese refiners, responding to lifted export restrictions, have sharply increased runs: August throughput rose 11% month-on-month to about 13.9 million barrels per day while inventories were drawn down by roughly 639,000 b/d to support exports. At the same time, futures on the Shanghai exchange climbed to a record $138 per barrel as buyers competed for available October cargoes.
Physical flows are being constrained by sharply higher shipping and insurance costs. Chartering a very large crude carrier (VLCC) in the Persian Gulf is now being quoted at the equivalent of $30–32 per barrel for transport, with additional war-risk premia and insurance on top. Some market participants report record tanker charter rates approaching $1 million per day, and those costs are limiting how quickly cancelled Red Sea loadings can be replaced by Gulf exports through Hormuz.
The supply shock is rippling through markets and industry deals. Aramco cancelled some late-September crude cargoes for European term buyers after the pipeline halt, and Asian benchmarks have been trading $15–20 per barrel above ICE Brent. Other industry moves in the same market update include Enbridge’s agreement to buy Tallgrass Energy’s oil business for $2.55 billion, PDVSA restarting the fluid catalytic cracker at its 310,000 b/d Cardon refinery, and new LNG-related contracts and negotiations involving JOGMEC, Petronas, QatarEnergy, and several U.S. exporters. Separately, Sempra Infrastructure agreed to supply 0.8 mtpa of LNG to Petrobras from Port Arthur’s second phase beginning in 2030 under a 20-year deal.
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