Kamal Ghorui
Saudi Arabia is set to significantly scale back its oil supplies to China next month, with traders indicating that shipments could fall to nearly half of the volumes seen in April as the Middle East tensions continue to intensify and disrupt energy flow across the country.Chinese buyers are expected to receive around 20 million barrels in May, half compared to 40 million barrels which are scheduled for April, traders familiar with the allocations told Bloomberg. The shift comes amid major upheaval in regional energy logistics following the Iran war, which has effectively shut down the Strait of Hormuz, a crucial passage for crude exports. Saudi Arabia has been redirecting shipments through its Red Sea terminal at Yanbu, but the alternative route is unable to handle the full volume that previously moved through the Persian Gulf.The war, now in its second month, has yet to show signs of de-escalation. Efforts to reach a breakthrough in talks between the United States and Iran in Pakistan over the weekend did not yield an agreement. Consequently, US President Donald Trump threatened to blockade the Strait of Hormuz, preventing all maritime traffic from entering and exiting Iranian ports from 10 am Washington time on Monday.Meanwhile in Saudi Arabia, export capacity from Yanbu stands at about 5 million barrels a day, falling short of the roughly 7.2 million barrels a day shipped prior to the conflict, most of which moved through Gulf-based infrastructure. Traders added that Asian refiners are currently being supplied only with Arab Light crude through the Red Sea route.Pricing benchmarks linked to Dubai and Oman crude have become unstable as the conflict has reduced the availability of key oil grades used to set their value.Meanwhile, with the Strait of Hormuz effectively disrupted amid tensions with Iran, oil markets opened sharply higher, pushing prices back above the $100-per-barrel mark. US crude oil (WTI) rose 8% to $104.24 per barrel, while Brent crude, the global benchmark, gained 7% to $102.29 in early trading.
