Saudi Aramco has provided additional oil shipments for delivery to the European market in October and November following the restart of the East-to-West pipeline. This action is seen as an effort to compensate for lost supplies due to the temporary shutdown of this export pipeline.
Discounts on Oil Shipments
According to informed sources, Aramco offered loading of oil shipments for late October to buyers earlier this month and has recently added additional deliveries available for November to these shipments. The shipments loaded in October are offered at a discount compared to Aramco's official price and can be loaded from the Mediterranean port of Sidi Kerir or the Yanbu port on the Red Sea coast of Saudi Arabia.
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Impact on the European Oil Market
Aramco had previously informed European refineries that they would not receive any shipments under long-term contracts in October following the attack on the key East-to-West pipeline. However, with the pipeline's restart, Aramco has been able to increase its exports and reduce pressure on the European oil market. According to traders, the increase in oil supply from Saudi Arabia has led to a decrease in the prices of certain types of oil in Europe. This price drop is evident in the purchase of a CPC oil shipment by ExxonMobil from Chevron at the lowest price in several years.
According to ship tracking data, Saudi Arabia exports an average of between 700,000 to 800,000 barrels of crude oil to Europe daily. Most of these supplies are under long-term contracts, but uncertainty regarding these shipments has pushed European refineries toward cash purchases.
Middle Eastern oil exports have generally increased to levels close to pre-war despite ongoing attacks on key infrastructure. In September, Saudi Arabia raised its production to over 8 million barrels per day, recovering from its lowest level in over three decades. Additionally, according to the International Energy Agency, the United Arab Emirates has reached its highest production level on record, and Iraq's exports are also approaching pre-conflict levels.
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