Declining Middle East Gulf Crude Loadings Extend Deliveries to Asia
Key Facts
Weekly crude loadings from the Middle East Gulf fell in the second half of October, alongside an increase in attacks and Iran’s tougher stance toward non-compliant vessels, according to Lloyd’s List. The publication did not specify the size of the decline, but said rerouting via the Red Sea and ship-to-ship transfers in the Middle East Gulf had extended the time crude takes to reach Asian ports. That leaves refineries facing delays in cargo arrivals as they contend with disrupted tanker traffic in the region. The report does not establish that these disruptions lifted global oil prices. Nor does it quantify the shortfall in supplies available to buyers.
Lloyd’s List described the situation as a continuation of the shipping dilemma facing Asian refineries, amid Houthi attacks on Saudi Arabia and the Strait of Hormuz crisis. It said, "There is no reliable end in sight to the Middle East’s dual dilemma, with Houthi attacks on Saudi Arabia continuing amid the Strait of Hormuz choke point." Its warning of declining loadings comes as routes for crude leaving the Gulf remain exposed to disrupted traffic and rerouting. Longer voyages widen the gap between crude loading and arrival at refineries, while ship-to-ship transfers make cargo routes more complex. That does not mean those operations increased; the report cites them only as a factor extending arrival times.
In the latest developments related to the Strait of Hormuz, Iran said 3 oil tankers struck mines and caught fire during the 24 hours through 29 October as they attempted to leave the strait via an unauthorized route. The Associated Press was unable to immediately verify the account. The agency cited the United Kingdom Maritime Trade Operations centre as saying a vessel had spotted another ship on fire while transiting the strait, with the condition of the crew and the extent of the damage unclear. These incidents add to risks around tanker traffic, but on their own do not establish the extent of their impact on crude flows to Asia. The account of the three tankers remains attributed to Iran, while the UK centre reported the sighting of a ship on fire.
On the Red Sea route, the Houthis said they targeted Saudi Arabia’s Ras Tanura refinery with a ballistic missile on 27 October; Saudi authorities did not immediately confirm the attack, according to Reuters. The refinery has a nominal capacity of 550,000 barrels per day, the report said. Lloyd’s List warned that continued attacks on ships and oil facilities in Saudi Arabia could further restrict Asia’s access to readily available crude. The publication framed this as a possibility, saying, "Continued attacks on shipping and oil facilities in Saudi Arabia could further restrict Asia’s access to readily available crude." The risk identified by refineries is therefore tied to the concurrent disruptions in Hormuz and risks in the Red Sea, while the impact of any individual attack on supplies remains uncertain in the available sources.
International Energy Agency data for September show crude exports from Gulf producers rose 4.4 million barrels per day from August, to 13.9 million barrels per day, as supplies recovered, but remained below pre-war levels. Oil flows through the Strait of Hormuz also increased by 3.7 million barrels per day in September from August, to 10.9 million barrels per day; ship-to-ship transfers in the Gulf of Oman helped support them. The comparison shows that flows partially recovered before the decline in weekly loadings that Lloyd’s List identified in the second half of October. The agency said observed global inventories at the end of September remained 509 million barrels below pre-war levels. Meanwhile, draws from commercial inventories, particularly in China, helped curb prices, but the agency said this could not continue indefinitely.
In its report released on 14 October, the International Energy Agency said record-high freight costs raised crude delivery costs and weakened refinery margins, while Brent futures rose 13% from the start of September through the report’s release. This provides market context independent of the shipping disruptions identified by Lloyd’s List; the report does not attribute the rise in Brent to delayed cargo arrivals alone. The agency estimated global refining at a seasonal trough of 81.3 million barrels per day in October, before rising to 84.6 million by year-end. It said freight and crude costs pressured refinery margins in Asia and Europe. The agency warned that any further deterioration in refining profitability could prompt marginal refineries in the two regions to cut operations, potentially tightening the market.
The agency expected the oil market to remain in deficit through the end of 2026, with middle distillate supplies remaining constrained through 2027. It also projected that global oil demand would fall year on year by 2.5 million barrels per day in the fourth quarter of 2026, and by 2.6 million barrels per day on an annual average basis. These projections place shipping and refining pressures in a market also facing expected weakness in demand. On the supply side, Lloyd’s List warned that continued attacks on shipping and Saudi oil facilities could further restrict Asia’s access to readily available crude. According to these estimates, the risks ahead centre on shipping routes, refinery profitability and the market balance through year-end, with middle distillate constraints continuing through 2027.