The supply of Very Large Crude Carrier (VLCC) tankers in the Eastern Mediterranean has reached nearly 30 ships, indicating changes in loading and oil transport routes, especially from Yanbu towards Western and Asian markets. These changes are a result of Houthi attacks on Saudi-controlled assets in Bab al-Mandab and increased demand from Asian customers.
Impact of Attacks on Loading Routes
The Houthi attacks on Saudi assets in Bab al-Mandab have led to a change in the loading route of crude oil from Yanbu towards the Mediterranean. This change in route has increased the supply of VLCC tankers in the Eastern Mediterranean from marginal levels to nearly 30 ships. However, the overall VLCC supply in the West remains at a level similar to that observed from mid-April to June. Meanwhile, attacks on ships have also reduced the supply of tankers and increased repair times.
Read more: Increase in Oil and LNG Exports from the Strait of Hormuz to the Highest Level in Six Months
Market Challenges and Volatility
Damage from recent attacks on the Saudi East-West pipeline has also impacted the market. Estimates suggest that repairs may take about five weeks, leading to a reduction in loadings from Yanbu and a subsequent decrease in VLCC supply from the Eastern Mediterranean. If new loads are not sourced from other locations, this situation will lead to a decrease in demand for VLCC tanker distances. Currently, tankers loading from the East are likely to remain idle due to increased charter rates.
On the other hand, China has acted as a major player in the oil market this year. The country is trying to balance the oil market by reducing imports and refinery activities. Reports suggest that China may supply up to 20 million tons of crude oil from its strategic reserves to domestic refiners, which could impact import demand.
Ultimately, market volatility due to geopolitical issues and uncertainty in oil supply has created new challenges for the oil transportation market. High oil prices and fleet charter rates may lead to reduced demand, while the market moves towards greater instability and volatility.
Read more: Increase in European Demand for LNG Amid Declining Asian Imports · 12.7% Growth in China's Oil Product Exports in August
