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Saudi Arabia Turns to Gulf Ports as Yanbu Constraints Increase Hormuz Exposure, Kpler Says

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Saudi Arabia is shifting more crude loadings to Gulf ports as Yanbu constraints grow, increasing exposure to the Strait of Hormuz, Kpler said in a Tuesday note.

Saudi Arabia has gradually increased Gulf of Oman shuttle operations after the late-July Houthi blockade targeted Saudi-linked vessels in the Red Sea, said Homayoun Falakshahi, head of crude oil analysis at Kpler.

At least 12 very large crude carriers with established shuttle-trade histories have called at Saudi Arabia's Middle East Gulf ports, signaling a broader shift from Yanbu exports.

Higher shuttle activity has reduced vessel utilization from 2.5 voyages per month during the memorandum of understanding period to about 1.7 currently.

At current utilization, each additional VLCC adds about 110,000 barrels per day to 130,000 b/d of export capacity. Redirecting 3 million b/d would require about 25 vessels.

Saudi Arabia's national tanker operator Bahri controls about 50 VLCCs and could quickly add capacity, with 17 vessels currently ballasting in the Gulf of Oman, Kpler said.

Bahri vessels have largely avoided the Red Sea since a Saudi-linked ship came under attack, instead positioning in the Gulf of Oman.

A voyage from Sohar to Ras Tanura takes about 1.5 days at 12 knots, allowing Bahri to quickly move suitable vessels into Middle East Gulf shuttle trades, Kpler said.

South Korea's Sinokor provides an even larger pool, with more than 127 VLCCs and about 40% of its fleet already active in Middle East Gulf trades.

Kpler said there may be a practical limit to the share of an operator's fleet allocated to higher-risk Middle East Gulf operations.

However, the higher earnings on Middle East Gulf routes could encourage more operators to commit vessels despite the operational risks.

Benchmark Middle East Gulf earnings stand at about $1 million per day, offering a premium of roughly $0.4 million per day over Gulf of Oman trades, Kpler said.

Kpler said vessel availability poses less of a constraint than the risks tied to higher Strait of Hormuz traffic as Saudi Arabia expands Middle East Gulf loadings.

More Hormuz traffic could give Iran greater leverage over flows, while narrower shipping routes may limit flexibility and heavier ship-to-ship activity could strain Gulf of Oman lightering capacity.

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US Oil Update: Futures Rise on Saudi Pipeline Attack, Vessel Strikes

Crude futures settled higher in after-hours trading on Monday as strikes on Saudi Arabia's East-West pipeline and attacks on vessels in the Strait of Hormuz heightened fears of severe, long-term global supply disruptions.Front-month West Texas Intermediate futures gained 1.8% to $101.89 per barrel, while Brent futures were up 1.7% to $106.39/bbl.Saudi Arabia has shut down the 7 million barrels per day pipeline, ING strategists said, adding that it's unclear how severe any potential damage is or how long it will be out of action.On Friday, Saudi Arabia shut its East-West oil pipeline as a precaution after it came under multiple attacks in the Riyadh and Medina regions.The pipeline has served as a critical alternative to the Strait of Hormuz, and Gelber & Associates analysts said its closure threatens exports from Yanbu if repairs extend beyond the port's limited inventory buffer."The relatively contained price reaction suggests the market still expects Saudi inventories to cushion exports in the near term, but if the disruption extends beyond the five-to-seven-day inventory cushion, that could change quickly," said Janiv Shah, vice president, commodity markets - Oil at Rystad Energy.On the supply front, President Trump said on Monday that crude was flowing through the Hormuz and that countries benefiting from the strategic waterway's security should reimburse the US for the costs of protecting it.The latest data from Windward showed that 17 vessels crossed the strait as of Sunday, comprising 10 inbound transits along the southern US-assisted lane and seven on the northern Iranian-controlled lane.Iran's Islamic Revolutionary Guard Corps said on Monday said that supertanker "Algaya" exploded after striking naval mines as the vessel tried to transit the Hormuz through a restricted zone south of the strategic waterway.The US President also claimed that Iran wants to reach a deal with the US, while making clear that he would decide whether Washington would negotiate."The failing Nation of Iran wants to make a deal, quickly and badly," Trump said in a social media post on Truth Social. "I will determine whether or not the US will choose to engage..."Meanwhile, a meeting between Iran and the six-member bloc of Gulf countries to discuss the situation in Hormuz, originally scheduled to take place Monday in Oman, has been postponed after the attack on the pipeline.Esmaeil Baqaei, spokesperson of Iran's Ministry of Foreign Affairs, said in televised remarks on Monday that Saudi Arabia's request to postpone the regional summit and attribute it to developments in Yemen is "a diversion from the root causes of this crisis."ING strategist said that the delay in the meeting between Iran and Gulf states pushes any prospect of de-escalation even further out of reach.

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Crude Tanker Rates Hit New Highs as Hormuz Attacks Raise Shipping Risks, Kpler Says

Crude tanker rates hit new highs as escalating attacks in the Persian Gulf and Strait of Hormuz push shipping risks higher, Kpler said Monday.About 24 successful strikes have emerged over the past two weeks, with eight attributed to the US and the rest to Iran, sharply raising risks for crude shipping.Despite the attacks, US Navy convoys continue moving Gulf barrels, while owners and charterers remain willing to load under escort as higher risks translate into steeper freight costs.Very Large Crude Carrier freight from the Middle East Gulf to China reached $24 per barrel, while Gulf of Oman cargoes climbed to $12/bbl.Freight now accounts for 25% of crude value on Middle East Gulf shipments, up from 17% when the conflict began and about 5% before the war, Kpler said.For Gulf of Oman cargoes, freight represents 11% of crude value, showing how shipping costs increasingly determine the delivered price Asian refiners pay.Tanker rates outside the Middle East also reached their highest levels of the year as owners position ships for Gulf employment, leaving Atlantic Basin buyers competing harder for vessels.That competition is spreading the Hormuz risk premium across global tanker routes, even where ships have no direct exposure to the Strait, Kpler said.Kpler expects tanker rates to stabilize in the coming days, as another major increase in geopolitical risk would likely push the market toward fewer Gulf loadings instead of higher freight.Continued attacks could therefore reduce crude availability and Gulf tanker demand rather than trigger another proportional freight surge, creating a ceiling for rates despite elevated shipping risks.Higher freight costs are also pressuring Asian refiners, which need stronger refined-product margins to offset rising crude delivery expenses from the Middle East Gulf and Gulf of Oman.Refiners unable to pass those added costs to fuel buyers could face weaker economics, extending the tanker market squeeze across the broader oil complex, Kpler said.

Oil & Energy

Saudi Oil Exports Could Fall Up to 4 Million B/d if Pipeline Outage Persists, Kpler Says

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