Saudi Red Sea crude exports fall 41% since March as India and China chase replacement barrels
Yanbu loadings ran about 2.39 million bpd in June, down 41% from a March peak of 4.07 million bpd, according to Wood Mackenzie vessel tracking and cargo data. Saudi Arabia had pushed nearly all of its exports through the East-West pipeline to Yanbu when the Iran war started, so the decline hits the one outlet the kingdom was leaning on. Volumes out of Yanbu are down 66% from total Saudi export levels.
For US wholesale buyers the effect is indirect but real. Fewer Mideast barrels reaching Asia means Asian refiners bid for Atlantic Basin and Latin American grades that Gulf Coast refiners also buy, and delivered crude cost eventually shows up in rack.
India's new grades
Indian state refiners have changed where they buy. "We diversified our crude sourcing outside of the Strait of Hormuz, exploring multiple geographies including two new crude grades from Venezuela and Angola," a refinery executive told the Economic Times. India is the third-largest crude importer in the world. When it starts buying West African and Venezuelan barrels in volume, that competition may lift the delivered cost of similar grades into PADD 3.
China's early ESPO buying
Chinese refiners have bought up every August-loading cargo out of Russia's Kozmino, weeks earlier than usual, traders told Bloomberg. ESPO's discount to ICE Brent narrowed to about $1 a barrel from $3 to $4 two weeks earlier. Buyers are paying more for barrels that never touch Hormuz or the Red Sea.
ADNOC issued its seventh crude tender since the start of June, offering August through October loading barrels from inside and outside the Persian Gulf, per Reuters. It has sold an estimated 74 million barrels since June despite the Houthi threat to Red Sea shipping. Barrels are still moving. The routes have changed.
Louisiana supply shifts
RBN Energy looked at crude flows into and out of southwestern and northwestern Louisiana this week and flagged that the status quo may be in for changes. Each of the state's three refining regions has its own crude sources and its own delivery method. Jobbers pulling from Lake Charles and Shreveport racks should pay attention to which pipelines feed those plants, because a supply rerouting there can move differentials before it moves headlines.
Costa Azul startup
Energia Costa Azul shipped its first cargo on July 8, adding 0.4 Bcf/d of nominal export capacity from a single train and tripling Mexico's LNG export capacity. It is the second North American terminal on the Pacific Coast after LNG Canada, taking Pacific export capacity to 2.2 Bcf/d.
What to watch
July Yanbu loadings will show whether the drop has leveled off. Also worth tracking: whether Indian buying of Venezuelan and Angolan grades goes past the test cargoes, and where the ESPO discount settles if Hormuz risk stays elevated.