Saudi Arabia is in talks with customers to offer oil loadings next year outside the Strait of Hormuz in long-term contracts, formalizing a system the kingdom has used during the Iran war, according to people familiar with the discussions. If approved by year-end, it would change how the bulk of Saudi crude, which moves under long-term contracts, reaches customers.
The war in its eighth month has left Hormuz severely disrupted, and shipowners have been reluctant to transit the strait, forcing Gulf exporters to run “shuttles” where sellers take the risk of passage and transfer cargoes to other vessels outside the waterway. Saudi Arabia, the UAE, Kuwait and Iraq have all used the system.
Aramco is also discussing delivering cargoes all the way to Asian customers and pricing some long-term contracts against Brent futures instead of the Dubai and Oman benchmarks, the people said. Buyers have recently been allowed to conduct ship-to-ship transfers off India’s coast to avoid the Gulf of Oman. No final decisions have been made, and Aramco and the Saudi Energy Ministry did not respond to requests for comment.