SINGAPORE — Saudi Arabia has sold about 60 million barrels of crude oil for loading through ship-to-ship transfers off Oman in September and October, deploying a major logistical workaround to keep exports flowing after damage to its East-West pipeline disrupted shipments from the Red Sea.
The Saudi cargoes will be loaded from Ras Tanura, the kingdom’s main Gulf export terminal inside the Strait of Hormuz, then transferred to larger vessels near the Omani port of Sohar, according to multiple trade sources cited by Reuters. The plan is expected to sustain Saudi Aramco’s Gulf exports at roughly 1 million to 1.5 million barrels a day, similar to or slightly above August levels.
The maneuver has eased immediate concerns that Saudi supply losses would send oil prices sharply higher. Brent crude fell 2.2% to $102.53 a barrel Friday, while U.S. West Texas Intermediate crude dropped 1.8% to $100.04 as traders weighed reports of additional Saudi cargoes and a possible partial pipeline restart within days.
But the workaround comes with an important limitation: Saudi oil still has to pass through the Strait of Hormuz before it can be transferred near Sohar. Ship-to-ship transfers reduce the exposure of long-haul tankers and help keep cargoes moving to Asian buyers, but they do not eliminate the underlying risk from a waterway where traffic remains far below normal.
The development offers a measure of relief to Asian refiners and global fuel markets. It also shows how quickly oil producers can adapt to disruption — and how fragile those adaptations can remain when conflict threatens pipelines, ports and shipping lanes at the same time.
A 60 million-barrel emergency export plan
Saudi Aramco, the world’s largest oil company, has reportedly sold about 60 million barrels for September and October loading through the Oman transfer arrangement.
The crude will originate at Ras Tanura, a Saudi export complex on the Persian Gulf. Smaller tankers or short-haul vessels can carry the oil through the Strait of Hormuz to waters off Sohar, Oman, where the cargo is transferred to large long-haul tankers for delivery to customers in Asia.
The plan is a response to the disruption of the kingdom’s East-West pipeline, which normally allows Saudi Arabia to send oil from eastern production fields to Yanbu, a Red Sea export hub. The pipeline gives Riyadh an alternative to sending crude through Hormuz.
Damage from an attack last week forced Saudi Arabia to reduce flows through the pipeline and slowed exports from Yanbu. That created immediate concerns that a major share of Saudi crude could be stranded or delayed at a time when Gulf shipping was already threatened by the wider Iran conflict.
Saudi Arabia has now responded by moving more barrels from its Gulf terminals and using ship-to-ship, or STS, transfers off Oman.
The approach allows the kingdom to separate two risky parts of the journey:
- A short-haul vessel moves crude through the Strait of Hormuz.
- A larger tanker receives the cargo outside the immediate Gulf transit zone.
- The larger vessel then continues toward Asian destinations without needing to enter Hormuz itself.
This does not create a new pipeline or an entirely new route. It is a maritime workaround that shifts the risk and logistics of transportation.
The key distinction: It does not bypass Hormuz
Some descriptions of the plan have suggested that Saudi Arabia is routing oil “around” the Strait of Hormuz. That is not fully accurate.
The long-haul vessel can remain outside the strait. But the oil itself is still loaded inside the Gulf and must be carried through Hormuz by another tanker before the offshore transfer occurs.
“It is not a route around Hormuz,” said Arsenio Longo, founder of maritime intelligence firm Huax, in reporting by AGBI. “The crude is still loaded inside the Gulf, moved through Hormuz and then transferred off Sohar to a long-haul tanker that stays outside the strait.”
That distinction matters because Hormuz remains the main physical chokepoint.
Before the current conflict, the waterway carried roughly one-fifth of the world’s oil and gas. On Thursday, only four commodity vessels transited the strait, according to preliminary Kpler data cited by Reuters, three entering the Gulf and one leaving it. The 10-day average was about 16 vessels.
The data may undercount some activity because ships sometimes turn off transponders in conflict zones to reduce the chance of being detected. But the decline underscores the danger facing shippers and exporters.
Saudi Arabia’s workaround helps reduce the number of large, high-value long-haul vessels that must transit the strait. It does not remove the need for smaller shuttle tankers to make that transit.
| Element | What it does | What it does not do |
|---|---|---|
| Ras Tanura loading | Moves Saudi crude from Gulf export facilities | Does not avoid the Strait of Hormuz |
| Short-haul shuttle tanker | Carries crude from the Gulf through Hormuz | Still faces regional security and insurance risks |
| Sohar ship-to-ship transfer | Moves oil to a larger vessel outside the immediate Gulf zone | Does not create a new physical oil route |
| Long-haul tanker | Can sail to Asian markets without entering Hormuz | Depends on successful transfer and ship availability |
| East-West pipeline | Normally sends crude to the Red Sea and avoids Hormuz | Remains damaged and not fully operational |
The workaround is therefore best viewed as risk management rather than a complete solution.
Why Oman’s Sohar port matters
Sohar sits on Oman’s northern coast, outside the Strait of Hormuz and along the Gulf of Oman. Its location makes it a practical transfer point for crude that has made it through the chokepoint but needs to be loaded onto a larger tanker for long-distance delivery.
Ship-to-ship transfers are common in global oil trading, though they can be operationally complex. The process requires specialized crews, compatible vessels, calm enough weather, environmental safeguards, port or maritime authority coordination, insurance coverage and careful scheduling.
For Saudi Arabia, the arrangement creates a way to preserve cargo deliveries to its most important customers.
Chinese and South Korean refiners are among the largest buyers of the Saudi spot cargoes, with additional volumes heading to India and Japan, Reuters reported.
The focus on Asia is logical. Asian refiners are the principal market for Saudi crude, and their ability to secure supply is critical to both regional fuel markets and Saudi Arabia’s export revenue.
Japan’s Petroleum Association said refiners had secured sufficient crude supplies through November, pointing to the Sohar ship-to-ship transfers as a key reason.
“In some cases, oil passes through the Strait of Hormuz at Saudi Arabia’s risk before being transferred to us outside the Gulf,” association President Shunichi Kito said. “For that reason, supplies from Saudi Arabia have not ceased entirely.”
The phrasing is revealing. Saudi Arabia is taking on a larger portion of the transit risk in order to reassure customers and keep commercial relationships intact.
Easing oil-market anxiety
The additional Saudi crude offers helped calm oil markets Friday.
Brent crude fell 2.2% to $102.53 a barrel, and WTI fell 1.8% to $100.04. Both benchmarks remained above $100, reflecting continued concern about conflict, shipping risks and the damaged pipeline. But they were down for a third consecutive session, putting Brent on track for its first weekly decline in three weeks.
The decline reflects a shift in expectations.
Earlier in the week, traders worried that the East-West pipeline shutdown could significantly reduce Saudi supply. Sources said crude loadings at Yanbu had been suspended and some deliveries to Europe had been canceled after the attack.
Reports that Saudi Arabia was offering more cargoes through Oman, combined with indications that it might restore about half of the pipeline’s capacity within days, reduced the immediate fear of a larger supply loss.
“Recent efforts to restore Saudi export capacity have reduced some of the immediate supply anxiety,” Priyanka Sachdeva, head of market insights at Phillip Nova, told Reuters.
The critical phrase is “immediate supply anxiety.”
Markets are not treating the crisis as resolved. They are responding to evidence that Saudi Arabia can partially compensate for lost Red Sea export capacity. Prices remain elevated because traders still do not know how quickly the pipeline can return to full operation or whether shipping through Hormuz can normalize.
A clear and sustained increase in Hormuz traffic would allow more of the geopolitical premium in oil prices to unwind, Sachdeva said.
The cost of the workaround
Saudi Arabia’s logistics solution is not free.
The cost of chartering a very large crude carrier, or VLCC, to carry 2 million barrels from Fujairah to Asia reached 800 on the Worldscale benchmark for early October loadings, Reuters reported. That was a record, according to a shipbroking firm.
Higher freight costs are a symptom of constrained tanker availability and greater perceived risk.
When shipping routes become dangerous, insurers raise premiums. Vessel owners demand higher rates. Tankers take longer routes or wait for security conditions to improve. Those delays reduce the effective supply of ships available worldwide.
The result can be higher costs even if oil production itself remains stable.
For refiners, the delivered cost of crude includes more than the benchmark price. It also includes freight, insurance, financing, delays and the risk that a cargo may not arrive on schedule. Those costs can eventually influence refinery margins, fuel prices and the willingness of buyers to accept certain grades of crude.
Saudi Arabia appears willing to absorb some of that expense because preserving export flows is strategically important.
Its role as a reliable provider is vital to its clout in global energy markets, as the monarchy relies largely on oil money. Stoking up clients in a crisis can assist preserve long-term market share, especially in Asia.
The East-West pipeline remains pivotal
The ship-to-ship strategy highlights the importance of Saudi Arabia’s East-West pipeline.
The pipeline, sometimes referred to as Petroline, connects oil fields in the kingdom’s east to the Red Sea port of Yanbu. It has been a central part of Saudi Arabia’s strategy for reducing dependence on the Strait of Hormuz.
Before the recent attack, the route had been moving about 4 million to 5 million barrels per day, according to industry sources previously cited by Reuters. That volume represented about 4% of global oil supply.
The pipeline’s capacity is estimated at up to 7 million barrels per day, though actual flows vary according to production, demand, storage and logistics.
If the route is unavailable for a long period, the implications are serious.
Saudi Arabia can increase Gulf exports, use stored crude, deploy ship-to-ship transfers and adjust deliveries. But none of those options replaces a large, secure pipeline that moves crude across the kingdom to the Red Sea.
The pipeline also matters because the alternative Red Sea route is under pressure from another direction. The Houthis have seized Yemen’s Red Sea coastline, raising concerns around the Bab el-Mandeb strait, another important shipping chokepoint connecting the Red Sea to the Gulf of Aden.
Saudi Arabia therefore faces a two-sided problem:
- Hormuz is constrained by conflict and security risk.
- The Red Sea route is threatened by instability near Yemen.
- The pipeline designed to provide a workaround has been damaged.
The Sohar arrangement is Saudi Arabia’s attempt to operate within those constraints.
Risks remain high
The workaround does not eliminate the risks facing Gulf oil exports.
Iran’s Revolutionary Guards Navy said a Togo-flagged oil tanker was struck Thursday while attempting what it described as an “illegal passage” through Hormuz.
Fresh strikes between Saudi Arabia and Yemen’s Iran-aligned Houthi forces have also widened concern that the conflict could spread further across the region.
The United States and Iran have held no peace talks since an interim agreement reached in June collapsed within weeks. The conflict is expected to be discussed next week at the U.N. General Assembly, where an Iranian delegation will be allowed to attend, according to the U.S. State Department.
Until there is progress on security or diplomacy, each barrel moved through the region carries a higher operational and geopolitical risk.
The current shipping data underscores the issue. Only four commodity vessels passed through Hormuz Thursday, compared with a 10-day average of about 16. Meanwhile, 23 commodity vessels used the Bab el-Mandeb strait, also below the recent average of roughly 26 ships.
The market has become a calculation of partial solutions. More Saudi cargoes via Oman reduce immediate supply fears. Pipeline repair plans offer hope. But constrained traffic through both key waterways means the global oil system remains vulnerable to any additional disruption.
What this means for buyers and consumers
For Asian refiners, Saudi Arabia’s move offers a near-term supply lifeline.
China, South Korea, India and Japan can continue receiving Saudi cargoes, helping reduce the need to find replacement barrels from more distant or more expensive suppliers.
For global oil markets, the plan reduces the likelihood of an immediate supply shock. That is why Brent and WTI prices declined Friday.
For consumers, however, the relief is limited.
Oil prices remain above $100 a barrel, freight costs are elevated, and the risk of renewed disruption is high. If the East-West pipeline cannot return to service, or if Hormuz traffic falls further, fuel costs could rise again.
Retail gasoline prices do not track oil benchmarks dollar for dollar. Taxes, refinery production, local inventories, fuel specifications and distribution costs all play a role. But sustained high crude prices generally put upward pressure on gasoline, diesel and jet-fuel costs.
The broader economic effect could include higher transportation costs, renewed inflation pressure and more difficult decisions for central banks already concerned about energy-driven price increases.
Saudi Arabia’s ability to keep crude moving through Oman may prevent the worst-case scenario. It does not remove the risk premium that has built into global energy markets.
What to watch next
The coming days will determine whether Saudi Arabia’s workaround becomes a temporary bridge or a longer-term emergency system.
The main signals to watch are:
- Pipeline repair timeline: Whether Saudi Arabia confirms partial or full restoration of East-West pipeline flows.
- Yanbu loadings: Whether Red Sea exports resume and European delivery cancellations are reversed.
- Hormuz traffic: Whether vessel transits recover from the current depressed level.
- Sohar transfer capacity: Whether ship-to-ship operations can be sustained at the planned volume.
- Tanker availability and freight rates: Whether record shipping costs keep rising.
- Asian buyer demand: Whether China, South Korea, India and Japan continue taking Saudi spot cargoes.
- Security developments: Any attack on a tanker, terminal, pipeline or transfer point could quickly reverse the market’s relief.
- Diplomatic activity: U.N. General Assembly talks may offer clues about whether a broader de-escalation is possible.
For now, Saudi Arabia has shown that it can adapt quickly. By moving roughly 60 million barrels through an Oman-based transfer arrangement, it has provided a partial answer to the loss of a vital pipeline route.
But the workaround is a reminder of how precarious global oil logistics have become: the oil is still moving through Hormuz, the pipeline is still damaged and the price of keeping energy flowing is rising.
