Saudi Arabia explores delivering its oil outside the Strait of Hormuz in 2027

Bloomberg - Saudi Arabia is holding talks with its customers to include a mechanism for delivering oil shipments outside the Strait of Hormuz in next year’s long-term contracts, a move that could cement a system the kingdom has adopted during the ongoing war to maintain supply flows and enhance its competitiveness in global markets.

Discussions with buyers are ongoing and are expected to be finalized before the end of the year. If approved, the amendments would mark a significant shift in how Saudi crude is exported, as long-term contracts account for the bulk of the kingdom’s oil sales.

The eight-month-long war has caused widespread disruption to traditional oil shipping routes, reducing the efficiency of transit through the Strait of Hormuz. This has prompted major Gulf exporters to adopt alternative arrangements to maintain customer supplies, including a “transshipment” system in which the seller assumes the risks of navigating the strait before transferring cargoes to other tankers outside the waterway.

Saudi Aramco has also explored additional amendments that would give customers broader options in pricing indices, and even the possibility of delivering shipments directly to buyers in Asia. No final decisions have been made yet, with details on pricing, shipping costs, and covered volumes still under negotiation.

Before the war broke out, Aramco relied on its Asian customers to charter tankers and collect shipments from the Ras Tanura port inside the Gulf, while the company typically did not arrange maritime transport.