Saudi Aramco is discussing discounts of up to approximately USD 9 per barrel with Asian refiners for selected crude cargoes scheduled for the second half of October and transferred ship-to-ship off Oman, Reuters reported on September 28, citing trading sources. The potential adjustment is intended to help buyers absorb sharply higher transportation costs following disruption to Middle East shipping routes and the rerouting of Saudi crude through Gulf export terminals. Aramco has not publicly confirmed a standardized discount program, and the USD 9 figure represents the upper end of discussions for certain cargoes rather than a blanket reduction.
Saudi Aramco normally prices exports against monthly official selling prices, or OSPs, for different regional markets, with individual cargoes trading above or below those benchmarks depending on crude quality, supply availability, freight conditions and demand. That relationship became unusually volatile as shipping disruptions intensified. At the tightest point in the market, some Saudi cargoes reportedly traded at premiums of USD 10 to USD 20 per barrel above OSPs, before soaring transport costs began to change the economics for Asian buyers.
Following disruptions to Saudi Arabia's East-West Pipeline and Red Sea export system, more barrels were redirected through Gulf terminals. Some cargoes are now loaded at ports including Ras Tanura, moved through the Strait of Hormuz and then transferred ship-to-ship near Sohar, Oman, before continuing to their final destinations. This routing requires additional tanker capacity, longer waiting periods and another cargo-handling operation, raising the landed cost for refiners.
Ship-to-ship transfers involve positioning two tankers alongside one another offshore and physically moving the crude between vessels. With tanker availability tight and voyage patterns disrupted, the cost of those operations has risen substantially. Saudi Arabia has reportedly scheduled more than 60 million barrels of crude for Oman-area STS transfers during September and October, with China, South Korea, Japan and India among the principal markets receiving the barrels.
Aramco has already used other commercial mechanisms to reduce some of the logistics burden on customers, including allowing selected cargoes to be priced or paid based on the month of arrival rather than the original loading month. The latest discussions over discounts of up to USD 9 per barrel would go further by reflecting part of the exceptional freight burden directly in the crude price, although actual terms can still differ by buyer, grade and delivery arrangement.
The logistics picture shifted again on September 29 as Saudi Arabia resumed crude and refined-product loadings from the Red Sea port of Yanbu. Flows through the East-West Pipeline are currently estimated at around 2 million to 2.65 million barrels per day, with higher throughput expected as operations recover. Tankers carrying nearly 10 million barrels have already been observed loading at Yanbu and nearby Al Muajjiz.
As Red Sea exports recover, the volume of crude requiring Oman STS transfers — and the pricing terms attached to those cargoes — could continue to change. As of September 29, Saudi Aramco had not announced an across-the-board USD 9-per-barrel discount for Asian customers.
