Saudi crude oil exports via Strait of Hormuz near 2-year high as Israel-Iran conflict unfolds

Saudi Arabia, the world's largest crude oil exporter, shipped the most product through the Strait of Hormuz in almost two years in the week ended June 15 just as the Israel-Iran conflict began, according to a June 17 report by S&P Global Commodities at Sea.

The nation's crude oil exports were 7.178 million b/d during the week, the highest since the week ended Oct. 15, 2023, according to CAS. Loadings from Saudi Arabia's Middle East Gulf ports climbed 24% from a week earlier to 6.628 million b/d, it said.

Shippers are on high alert to use the Strait of Hormuz after the Israel-Iran conflict began June 13. QatarEnergy has instructed LNG ships to stay outside of the Strait of Hormuz until a day before loading cargoes, a source familiar with the matter said June 18. The company did not respond to requests for comment.

Some 20% of the world's oil and LNG pass through the narrow lane that sits between Iran and Oman at the tip of the Arabian Peninsula. Platts-assessed Dated Brent has climbed 9.3% since June 12 to $77.47/b as of June 18, according to S&P Global Commodity Insights data. Platts-assessed JKM -- the LNG benchmark price for cargo delivered to Northeast Asia -- jumped 13% over the same period.

This was still higher than the four-week average of 319 tankers, "suggesting that despite the geopolitical climate, tanker vessel movements in the Strait during the second week of June remained robust compared to recent trends," the CAS report said.

CAS estimated nearly 20 million b/d of crude oil and refined products, except for LPG transit, through the Strait of Hormuz. Crude accounts for 78% of the outbound volume, with 36% from Saudi Arabia.

OPEC+ kingpin Saudi Arabia took the opportunity of accelerated quota hikes to pump an extra 170,000 b/d to meet demand in May, according to the latest Platts OPEC+ Survey from Commodity Insights. Production was 9.14 million b/d, the highest since its unilateral 1 million b/d production cut in June 2023 dubbed a "lollipop" for the market. The additional crude was used domestically amid soaring temperatures and preparations for the Hajj.

The average spread between laden, or loaded with cargo, and ballast tankers widened to minus 156 by June 15 from minus 148 on June 8 and minus 138 on June 1, according to the CAS report. "This suggests that there were fewer laden tankers actively transporting cargo relative to ballast tankers," it said.

Freight rates have rallied in recent days, "invariably prompting vessel operators to hold back tonnage in hopes of securing higher rates," the report said.

Platts assessed the Arab Gulf-Far East VLCC route at w70.5 on June 17, up from w47.5 on June 13. It fell to w68 on June 18.

Total ship traffic in the Strait increased 4% week over week in the week ended June 8, led by a 16% increase in LPG carriers.

Collectively, total ship traffic in the Strait increased 4% from the week ending June 8 to the week ending June 15, led by a 16% increase in LPG carrier movements.

The CAS report estimated nearly 20 million b/d of crude oil and refined products, except for LPG transit, through the Strait of Hormuz. Crude accounts for 78% of the outbound volume, with 36% from Saudi Arabia.