Saudi Oil Shipping 9-21-25

In September 2025, Saudi Arabia ships oil primarily to Asian markets, including China, using very large crude carriers (VLCCs) and other tankers. Exports to China were set to decrease in September due to a price increase, but oil prices for October were heavily cut, signaling a strategy to regain market share and boost shipments to Asia. The shipments are handled by the state oil company, Saudi Aramco, and pricing for these exports is based on benchmarks like the Oman/Dubai average.  

Shipping Method: 

·       Tankers: Saudi Arabia relies on the global shipping market, utilizing tankers of various sizes, particularly Very Large Crude Carriers (VLCCs) for long-distance transport of crude oil.

Key Markets & Strategy:

·       Asia: The most significant export destination is Asia, with China being the world's largest importer of Saudi oil. 

·       Market Share: Saudi Arabia has been adjusting its Official Selling Prices (OSPs) to Asia to influence demand and regain market share. 

·       Pricing: Prices are set by Saudi Aramco and are based on regional benchmarks like the Oman/Dubai average, with adjustments made monthly. 

Logistics & Operations:

·       Saudi Aramco: The state-owned oil company manages the allocations and shipments of oil to its buyers. 

·       Customer Preferences: Saudi Aramco communicates with its major customers, such as the large Chinese refiners like Sinopec, about the volumes of crude oil being shipped to them. 

·       Production and Demand: The overall amount of crude available for export is influenced by seasonal demand in Saudi Arabia (e.g., increased demand for air conditioning during the summer) and decisions by OPEC+ to adjust production levels. 

Saudi Arabia primarily ships crude oil via sea, utilizing its extensive maritime infrastructure. In September 2025, Saudi Aramco allocated approximately 1.43 million barrels per day (bpd) to China. 

Key Developments in September 2025

·       Increased Exports: Saudi Arabia is set to boost its oil exports this month due to higher production and reduced local demand after the summer peak, potentially adding about half a million bpd compared to the previous month.

·       Price Adjustments: Saudi Arabia has lowered the official selling prices for its crude oil for Asian buyers for October loadings, with the flagship Arab Light grade cut by $1 per barrel compared to September. This move aims to regain market share.

·       OPEC+ Decisions: OPEC+ decided on September 7 to begin unwinding its second tranche of supply cuts, planning to increase output targets by 137,000 bpd in October. Saudi Arabia's output is expected to reach 9.97 million bpd in September.

·       Shipping Routes: New container shipping routes have been launched, strengthening Saudi port connectivity with Asia and the Middle East, including a new service connecting Jeddah with ports in India, Egypt, Djibouti, and the UAE. 

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Norb Leahy, Dunwoody GA Tea Party Leader