By Florence Tan and Jonathan Saul
SINGAPORE/LONDON, May 7 (Reuters) – With their location trackers shut off to avoid Iranian attacks, the United Arab Emirates and buyers have recently sailed several tankers loaded with crude through the Strait of Hormuz in a bid to move oil bottled up in the Gulf by the Middle East conflict, according to industry sources and shipping data.
The volumes are a fraction of the UAE’s typical exports before the U.S.-Israeli war on Iran but they demonstrate the risks the producer and buyers are willing to take to free up oil sales. The other Gulf producers – Iraq, Kuwait, and Qatar – have either halted sales, deeply cut prices to entice uninterested buyers or are shipping only through the Red Sea in the case of Saudi Arabia.
In April, the UAE’s Abu Dhabi National Oil Co managed to export at least 4 million barrels of its Upper Zakum crude and 2 million barrels of Das crude on four tankers from terminals inside the Gulf, according to three sources, shiptracking data from Kpler and an analysis of satellite data from SynMax.
The shipments were either unloaded by ship-to-ship (STS) transfer to a vessel that later carried the oil to a Southeast Asian refinery, unloaded into storage in Oman or sailed directly to South Korean refineries, according to the three sources, one with direct knowledge of the matter and two familiar with ADNOC’s operations, and the Kpler and SynMax data.
Reuters is reporting this system of exports for the first time.
ADNOC declined to comment on the shipments.
Tehran responded to the U.S.-Israeli attacks that began on February 28 by effectively shutting the Strait of Hormuz to exports other than its own, bottling up a fifth of global oil and gas supply. The closure and a U.S. blockade that has halted Iranian exports in recent weeks has pushed global oil prices over $100 a barrel.
ADNOC has had to cut exports by more than 1 million barrels per day since the start of the war, from the 3.1 million bpd it shipped last year, Kpler data showed. Most of its exports are its Murban grade exported by pipeline from onshore fields to Fujairah.
RISKY SAILING
ADNOC’s shipments risk attacks from Iran. This was highlighted by the UAE’s accusation on Monday Iran used drones to attack an empty ADNOC tanker, the Barakah, passing through the Strait of Hormuz.
The ships move with their automatic identification system transponders turned off, which reduces the chance they will be spotted by Iranian forces. The tactic is commonly employed by Iran to skirt U.S. sanctions on its oil exports.
It also makes it difficult to track the total volumes of ADNOC’s exports through industry shipping data, meaning the volumes it shipped from the Gulf in April could be higher.
Still, Kpler data showed the VLCC Hafeet loaded 2 million barrels of Upper Zakum inside the Gulf on April 7 and exited the strait on April 15.
Outside the strait, the cargo was transferred to the Greek-flagged VLCC Olympic Luck on April 17-18 and shipped to the Pengerang refinery in Malaysia, a joint venture of Malaysia’s state-owned oil company Petronas and Saudi Aramco, Kpler data and SynMax analysis showed.
Hafeet is managed by the Logistics and Services unit of ADNOC, which declined to comment. Greece-based Olympic Shipping & Management, which manages the Olympic Luck, and Petronas did not respond to requests for comment.
Splitting up the oil by STS allows ADNOC to sell smaller cargoes and free up the VLCCs to move quickly back inside the Gulf to load again.
One of the broken up cargoes of Upper Zakum sailed to a Northeast Asian refinery and sold at a record premium of $20 a barrel over ADNOC’s official selling price, said the source with direct knowledge of the matter.
For Abu Dhabi’s Das crude, the VLCC Aliakmon I loaded 2 million barrels of the grade on April 27 and exited the strait on May 2, discharging at Oman’s Ras Markaz storage terminal on May 3, Kpler data showed.
Kpler and SynMax also found two Suezmax tankers – the Odessa and Zouzou N. – carrying 1 million barrels each of Upper Zakum, headed to South Korea after exiting the strait.
All three tankers are managed by Greece-based Dynacom Tankers Management. It was not clear who chartered the Dynacom tankers and the company did not respond to a request for comment.
ADNOC intends to continue to sell oil from inside the strait, notifying some customers in late April they could load Das and Upper Zakum crude from May via STS transfers at ports outside the Gulf including Fujairah and Oman’s Sohar.
The company is holding talks with Asian refiners to sell May-loading Das and Upper Zakum cargoes, said the source with direct knowledge of ADNOC’s plans, and an Indian refining source, who declined to be identified as they are not authorised to speak to the media.
(Reporting by Florence Tan and Siyi Liu in Singapore, Jonathan Saul in London and Nidhi Verma in New Delhi; additional reporting by Renee Maltezou in Athens; Editing by Tony Munroe, Simon Webb and Christian Schmollinger)
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