<p>The crisis in the Strait of Hormuz continues to escalate, and Saudi Arabia is forcing a switch of the global oil supply chain to a backup route.</p>
<p>According to Bloomberg on Monday, Saudi Aramco has officially offered long-term contract customers the option to pick up April crude oil quotas at the Red Sea port of Yanbu, marking the first time Saudi Arabia has included a Red Sea loading option in long-term supply contracts.</p>
<p><strong>However, buyers choosing Yanbu will only receive a portion of the monthly quota due to bottlenecks in pipeline capacity;</strong> those opting to continue loading from the Persian Gulf face the risk of receiving nothing due to the ongoing closure of the strait. This &#34;either-or&#34; arrangement reflects the deep uncertainty in the market regarding the duration of the Hormuz crisis.</p>
<p>This adjustment has a direct and far-reaching impact on the global oil market. Japan has initiated the release of its national strategic petroleum reserves, while approximately 30 very large crude carriers (VLCCs) are heading to Yanbu port, where the historical average monthly arrival volume is only about two vessels, making the ability to meet demand a core variable of market concern.</p>
<h2>Pipeline Capacity Constraints on the &#34;Red Sea Option&#34;</h2>
<p>Last month, Saudi Aramco's crude oil exports averaged 7.2 million barrels per day, with the vast majority shipped from the Persian Gulf terminals of Ras Tanura and Juaymah. Saudi Arabia has a pipeline running across the country with a daily delivery capacity of 5 million barrels directly to the Red Sea, but the actual export capacity at Yanbu port may be below this limit.</p>
<p>According to informed traders, buyers picking up at Yanbu can currently only obtain one grade of Arab Light crude oil. If the conflict continues, crude oil shipped from Yanbu to Asia may likely be settled on a &#34;delivered at terminal&#34; basis—meaning Saudi Aramco would handle transportation logistics, rather than the usual practice of buyers arranging shipping themselves.</p>
<h2>Asia at the Forefront, Europe Also Under Pressure</h2>
<p>The primary buyers of Saudi crude long-term contracts are in Asia. After the outbreak of the Hormuz crisis, Asian refiners have faced the most direct impact. Sinopec has reduced its operating rate by 10%, and Japan has tapped into its national reserves, both emergency measures to cope with supply disruptions.</p>
<p>Since the outbreak of the conflict (now entering its third week), Saudi Aramco has continuously increased shipments via Yanbu and has taken unusual measures to sell crude oil shipped from that port through spot tenders. Including the Red Sea loading option in long-term contracts <strong>marks a shift from temporary operations to institutionalization.</strong></p>
<p>European refiners have also not been spared, with some large European refineries reporting that the contract quotas received from Saudi Aramco were below expectations, with one major refinery loading zero barrels in April and another receiving less than its requested quota.</p>
<h2>High Uncertainty Regarding the Duration of the Crisis</h2>
<p>The fundamental driving force behind this supply chain restructuring is the high uncertainty in the market regarding the trajectory of the Hormuz crisis. Iran's attacks on past vessels and infrastructure have caused nearly all oil exports from the Gulf region via Hormuz to come to a standstill, and oil-producing countries such as Iraq, Kuwait, and the UAE have begun to cut production as their storage facilities in the Gulf region become saturated.</p>
<p>At the same time, Trump's fluctuating statements regarding the reasons for U.S. involvement in the conflict have made it difficult for both allies and adversaries to gauge when he might seek to end the conflict; even if the U.S. intends to withdraw, Iran has yet to show any willingness to cooperate
In this context, the &#34;either-or&#34; option offered by Saudi Aramco to buyers essentially transfers the cost of uncertainty to the buyer's side—choosing certainty means accepting quantity discounts; pursuing full supply entails bearing the tail risk of receiving nothing</p>

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<p>The Hormuz crisis has entered its third week, and Saudi Aramco has for the first time included the option to pick up at the Red Sea port of Yanbu in long-term supply contracts, forcing the global crude oil supply chain to switch to backup routes. However, pipeline bottlenecks restrict actual capacity, leaving buyers in a "choose one" dilemma: accept quota discounts for certainty or gamble on when the strait will reopen for full supply</p>

- The crisis in the Strait of Hormuz is prompting Saudi Arabia to shift its global oil supply chain to alternative routes, offering long-term customers the option to pick up crude oil at Yanbu port.  
- Buyers choosing Yanbu will receive limited monthly quotas due to pipeline capacity constraints, while those opting for the Persian Gulf face risks from ongoing closures.  
- This restructuring reflects deep uncertainty regarding the crisis’s duration, with significant repercussions for Asian and European refiners adapting to supply disruptions.

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Saudi Arabia has for the first time included Red Sea oil in long-term contracts, giving buyers a "choose one" option to cope with the Hormuz crisis