Despite disruptions due to the Iran war, Saudi Arabia has registered an increase in oil output, a phenomenon that directly helped OPEC+ to post a sharp production gain in September.
OPEC+, which includes the Organisation of the Petroleum Exporting Countries and allies including Russia, pumped an average of 39.07 million barrels per day in September, OPEC said in a monthly report, up about 900,000 bpd from August.
While the OPEC figures further strengthen what seems to be a strong recovery in oil supply from the Gulf players, shipments have remained below pre-Iran war levels.
Saudi state oil company Aramco ramped up oil loadings from Gulf export terminals in September after an attack on the East-West pipeline disrupted its shipments via the Red Sea.
The Kingdom, often known for its habit of leading OPEC’s production chart, pumped 8.372 million barrels per day in September, up well over two million bpd from August.
Saudi Arabia is also looking to expand its pipeline crude export capacity to as much as 10 million barrels per day by repurposing a domestic gas pipeline and investing in its existing East-West network.
Energy Minister Prince Abdulaziz bin Salman, while making the plan public on Monday, stated that the Kingdom could add up to 1.2 million barrels per day of oil export capacity within seven to eight weeks by temporarily converting a gas pipeline for crude shipments.
Up to three million bpd could be added in total with further investment, Abdulaziz said at the World Petroleum Congress in Riyadh.
The Kingdom’s leadership has already instructed Aramco to use the pipeline for oil transport until May, after which the infrastructure may require a clean-up before its operational return ahead of the summer season.
Abdulaziz sees upgrades to pumping stations on the East-West pipeline and other infrastructure projects potentially lifting the Kingdom’s capacity to divert shipments from its main maritime Gulf and Red Sea routes to around 10 million bpd by 2029.
Saudi, however, is now looking to move more oil out of the Strait of Hormuz, with several Asian refiners having already bought November crude in the spot market.
As per Reuters, while Chinese state-owned and independent refiners bought at least 12 million barrels of Saudi crude on a delivered basis, India and Taiwan too have grabbed oil for the November window.
Some of the delivered crude was priced at a premium of about USD 20 a barrel to November official selling prices (OSPs).
Sources claimed that Aramco made the sales through a tender issued last week and private negotiations.
While the Kingdom typically releases its OSPs at the beginning of each month and asks term buyers to nominate monthly volumes, it has now shifted volumes via the Hormuz to spot sales instead, as buyers are hesitating to charter ships to load crude inside the strait due to security risks.
Aramco is maintaining allocations for cargoes loading at the Red Sea of Yanbu and Egypt’s Sidi Kerir.
The state oil company set its November OSP for flagship Arab Light at USD 5 a barrel below the average of Oman and Dubai prices, a six-year low, as it sought to attract purchases and compensate buyers for elevated freight rates.