Saudi Aramco Offers Discounted Oil to Europe as Exports Recover

Saudi Aramco is offering additional crude to European refiners for October and November loading, just weeks after telling customers they would receive no oil under their October contracts following an attack on the kingdom's East-West pipeline.The Saudi oil giant offered late-October spot cargoes at a discount to its official selling price, according to Bloomberg, citing a person familiar with the matter. The shipments were available from either the Red Sea port of Yanbu or Sidi Kerir on Egypt's Mediterranean coast.Aramco followed those offers with additional November spot cargoes. European refiners have also been told they will receive their full contracted November allocations, a considerable improvement from the October cancellations.Aramco told European refiners earlier this month that their contracted October cargoes weren't coming after an attack shut down the East-West pipeline. Now the pipeline is running again, and the company is offering spot shipments for October and November, with some October barrels priced below its official selling price.Quite a turnaround for customers who were told they weren't getting any oil at all.Saudi Arabia normally ships 700,000 to 800,000 barrels per day to Europe, much of it under long-term contracts. The October cancellations sent refiners into the spot market looking for replacement barrels. Now Saudi crude is available again, and prices for some European grades have already started to fall.The additional Saudi supply has already helped push down prices for some crude grades in Europe this week, traders told Bloomberg.Saudi Arabia's production recovery has been substantial. The kingdom increased output by roughly one-third in September to more than 8 million bpd, rebounding from its lowest production level in more than three decades in August.Other Gulf producers are also recovering. The United Arab Emirates has increased production to a record high, according to the International Energy Agency, while Iraqi exports are approaching prewar levels.The recovery comes despite continued Iranian attacks on regional energy infrastructure and vessels near the Strait of Hormuz.Aramco is also pursuing additional overseas crude storage and alternative export capacity to reduce its exposure to regional disruptions, including an agreement to store oil in Singapore beginning in 2027.By Julianne Geiger for Oilprice.comMore Top Reads From Oilprice.comRas Tanura Fire Follows Attacks on Aramco Offices and Near Shaybah FieldInvestors From 119 Countries Pile Into Dangote’s Record Refinery IPOOPEC+ Set to Keep Oil Quotas Unchanged