With the ongoing Iran conflict casting a shadow over energy production and trading activities in the Middle East, state-owned energy conglomerate Abu Dhabi National Oil Company (ADNOC) has stepped up efforts to stabilise its offshore output levels to address storage requirements, while its onshore operations remain uninterrupted.
“This approach preserves operational flexibility and will enable the company to resume normal operations without prolonged delay. ADNOC has activated well-established protocols and is working closely with authorities to protect its people, assets and operations,” the company said in a media note.
While the conflict has blocked shipments through the Strait of Hormuz, the crucial waterway responsible for roughly 20% of global oil and LNG supply, analysts see the UAE and Saudi Arabia cutting their outputs if their oil storage fills up.
Discussing ADNOC, it is also using export capacity that bypasses the strait, along with international storage facilities, to ensure supply continuity to global markets.
Saudi state oil giant Aramco, on the other hand, has already diverted some crude shipments to the Red Sea port of Yanbu to ensure supply continuity for customers unable to access the Gulf route.
According to Reuters, while the energy major’s shipments from the Red Sea are increasing, the volumes are far from enough to offset the drop, caused by the disruptions at the Strait.
“Business units are assessing the situation on a product-by-product and transaction-by-transaction basis, considering the ongoing disruption affecting shipping through the Strait of Hormuz,” the media outlet commented.
Aramco has reportedly offered more than four million barrels of Saudi crude in rare tenders to keep the oil flow going into the global market. In a tender that closed at 5 pm Beijing time (0900 GMT) on 9th March, the company offered two million barrels of Arab Heavy crude loading at Egypt’s Ain Sokhna port. The loading date, as per the reports and tender documents, is from March 10 to March 30, with the sale, on a free-on-board basis, heading for Asia.
In a separate tender which closed on Sunday (8th March), Aramco offered 650,000 barrels of Arab Light crude on a cost and freight (CFR) basis, three traders told Reuters. These cargoes will be priced at premiums to the Gulf country’s March official selling prices. The third tender witnessed the sale of two million barrels to Japan’s second-largest refiner, Idemitsu Kosan.