Saudi Arabia may re-route tankers if U.S. imposes crude import ban
Saudi Arabia is exploring re-routing millions of barrels of oil on board tankers sailing to the United States if President Donald Trump decides to block imports of crude from the kingdom, shipping, and trade sources said.
Some 40 million barrels of Saudi oil are on their way to the United States and due to arrive in the coming weeks, piling more pressure on markets already struggling to absorb a glut of stocks, according to shipping data and sources.
U.S. officials have said in recent days that Washington is considering blocking Saudi shipments of crude oil, or putting tariffs on those shipments, adding to difficulties for the cargoes now on the water.
Shipping sources said the kingdom tried to seek storage options for the cargoes from tanker owners when the ships were chartered last month, but many pushed back given booming rates and not wanting tied-up vessels.
Saudi Arabia’s state oil company, Saudi Aramco, said it is committed to its long-term contracts with customers with deliveries of crude shipments for April, May, and June.
Aramco also “offers its larger customers with refineries in multiple regions of the world optionality to take their crude purchases from Aramco into the region,” the company said in a statement to the sources. “Changes in ship destinations are routine in the course of our business, particularly in a company of our scale,” it said.
Oil traders active in European and Asian markets said there was an expectation that the Saudis would look to divert the cargoes to other markets if a ban was imposed, which would then put huge pressure on storage tanks in those two regions.
The slump in demand triggered by the novel coronavirus and the hunt for storage options had prompted the United States to consider such action.
Shipping data showed 19 supertankers, each capable of carrying 2 million barrels of oil, we’re sailing to key U.S. terminals, especially in the U.S. Gulf. Three separate tankers, also chartered by Saudi Arabia, were currently anchored outside U.S. Gulf ports, the data showed.