Middle East oil exporters gear up for possible Strait of Hormuz resumption

Oil producers in the Middle East are preparing for a possible reopening of maritime shipping through the Strait of Hormuz.

Against this backdrop, the producers have contacted Asian refiners requesting April and May crude oil loading schedules, Reuters reports, citing three anonymous sources familiar with the matter.

A two-week ceasefire agreement between the United States and Iran announced on April 8 has revived hopes for reopening the strait, through which about 20% of global oil and liquefied natural gas (LNG) supplies flowed before the conflict.

However, there are still no indications that Tehran will lift its near-total blockade of the key waterway, which has driven up global energy prices.

“Top ​global exporter Saudi Aramco has asked its clients to submit nominations for cargoes ⁠loading from the ports of Yanbu and Ras Tanura in May,” two of the sources said.

“This would ​be subject to the resumption of exports from the eastern Ras Tanura port, which requires vessels to ​transit via the Strait of Hormuz,” one of them mentioned.

Last month, Aramco told buyers it would only be able to ship oil via the western Yanbu port on the Red Sea coast in April, using the East–West pipeline to transport crude.

However, due to attacks on Saudi energy infrastructure, oil production in the kingdom has fallen by around 600,000 barrels per day, while the capacity of the East–West pipeline has been reduced by approximately 700,000 barrels per day.

In addition, Kuwait Petroleum Corporation (KPC) has provided April shipment dates for Kuwaiti Export Crude (KEC) sold on a free-on-board (FOB) basis.

One source said “cargo nominations are in process and are ​subject to customers' ability ​to lift the cargoes.”

Last month, KPC declared force majeure on oil shipments after tankers were unable to enter the Persian Gulf and load crude.

Earlier this week, Iraq’s state oil company SOMO asked customers to submit loading schedules following reports that Iran had exempted Iraq from restrictions on transit through the Strait of Hormuz.

Following the ceasefire announcement, Asian refiners and trading companies have been seeking tankers this week to load oil in the Persian Gulf.

Commodity trader Glencore and Taiwan’s state-run refiner CPC each chartered one tanker to transport Middle Eastern crude to Asia, while Indian and South Korean refiners are also seeking tankers this month to ship Iraqi oil.

By Bakhtiyar Abbasov