Base oils shipments from Saudi Arabia’s Red Sea ports of Yanbu and Jeddah fell in February, tightening flows even before the wider Middle East supply disruptions that followed.

Total shipments from the two ports dropped to less than 30,000 tonnes in February, down from more than 40,000 tonnes in January, provisional shipping data showed.

The volume slipped to the second-lowest level in more than five years, with only December lower, when plant maintenance cut supply.

Even at lower levels, Saudi shipments remained an outlier in a tightening regional market, with exports from other Middle East refiners halted from late February.

The disruption increased the importance of supplies from Saudi Arabia for key regional buyers like India.

But buyers in the UAE saw no such benefit, with cargoes diverted to other markets instead.

Key Highlights

·         Most February shipments moved to India, where imports from Saudi Arabia recovered to a three-month high.

·         Some cargoes had been scheduled to move to the UAE before being diverted to India.

·         China’s imports from Saudi Arabia extended their pause for a second month.

·         A pause in shipments to Singapore extended through March, with the most recent shipment arriving last November.

·         March-loading volumes showed signs of staying lower than usual, with more shipments moving westwards to markets such as Egypt.

Market Repercussions

Even with ongoing shipments, loadings from Yanbu faced the risk of port congestion and higher costs.

Base oils production also faced the risk of drone and missile attacks and disruptions to feedstock supply.

Any slowdown in shipments to import-reliant markets such as India would compound the challenge of securing enough volumes to meet demand.