UAE Directs Some Oil Buyers to Route Imports Through Non-Straits of Hormuz Channels

Adnoc Explores Alternative Routes to Bring Oil to Market

Abu Dhabi National Oil Co. (Adnoc) has informed term customers of the availability of cargoes for loading off Fujairah, a port located outside the Persian Gulf. This move comes as producers explore different routes to bring their oil to market. According to traders who requested anonymity due to the private nature of negotiations, Adnoc has informed its buyers that they can pick up cargoes of grades including Upper Zakum via ship-to-ship transfer off Fujairah. The cargoes are mainly available for loading in May.

Upper Zakum typically loads from a port at Zirku Island, located deep within the Persian Gulf, that does not have a pipeline to the mainland. The availability of May cargoes via STS transfer off Fujairah means the shipments are on board vessels outside the Strait of Hormuz.

The Upper Zakum volumes now being marketed are from storage sites near Fujairah, which were then loaded onto crude tankers. According to a person familiar with the matter, the supply was put into storage before the war began.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Some ships that originated in the UAE appear to be getting through the strait. The Mubaraz, a liquefied natural gas tanker that loaded at Abu Dhabi National Oil's Das Island facility, is now passing the southern tip of India after last month idling inside the gulf.

Prior to these latest offers, the UAE had only supplied Murban crude from Fujairah. Elsewhere in the region, Saudi Arabia has diverted oil from within the gulf to the Red Sea port of Yanbu, where cargoes have loaded and sailed to customers including in India and South Korea.

Comparison of Oil Supplies from the UAE and Saudi Arabia

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

There are still problems with picking up cargoes from Fujairah, as the nearby waters remain too risky for some shipowners. Cost is also likely to be an issue, given Adnoc hasn't yet released official selling prices for its slew of grades for volumes that'll load next month.