Saudi crude accumulating off Red Sea

Vortexa data as of 16 June shows around 20mb across 10 VLCCs floating off Egypt’s Ain Sukhna with another two VLCCs currently heading to the same location. All 10 VLCCs currently floating have been stationary for seven days or more and most of these cargoes loaded during or after the second half of May.

 Saudi crude-laden tankers heading to or waiting off Ain Sukhna

It is hard to pinpoint the exact reason for this build-up of cargoes as there are no recent instances of Saudi crude accumulating in such volumes off Egypt’s coastline. The last time Saudi crude floating storage volumes were above current levels was in Q2 2020 when levels hit 30mbd, but that was amid a wider rise in floating storage volumes and a strong contango structure supporting the activity. Since then, other smaller spikes in Saudi crude floating storage took place during November last year, for delayed intra-Saudi flows, and in October-November 2021, when discharges were delayed into China.

 Crude/condensate floating storage off Egypt (mbd)

One possible explanation for the build-up in tankers off Ain Sukhna is for greater subsequent deliveries into Europe via the SUMED pipeline – which runs from Ain Sukhna to the Mediterranean Egyptian port of Sidi Kerir. Loadings from Sidi Kerir, are actually up by more than 200kbd so far this month suggesting stronger demand from European customers for Saudi (among other Middle East crude) grades. Vortexa’s latest arrivals data does not suggest any difficulty in discharging cargo at Ain Sukhna - arrivals volumes for the port, at around 1mbd so far in June (1-15), are virtually unchanged from May levels. Meanwhile, Vortexa onshore inventory data shows volumes across SUMED terminals to be rangebound, which reduces the possibility of any infrastructure difficulties causing higher Saudi crude floating storage.