Saudi Arabia's Fuel Oil Imports Surge 86% as Hormuz Closure Cuts Associated Gas Supply

Saudi Arabia imported 360,000 barrels per day of fuel oil in April, an 86% jump from a year earlier, as Iran's blockade of the Strait of Hormuz cuts into the kingdom's associated gas production and forces a switch to liquid fuels ahead of peak summer power demand, according to Vortexa data reported by Reuters. Iran's February closure of the strait forced Saudi Arabia to shut more than 3 million bpd of crude production when exports from Ras Tanura halted. Less crude flowing means less associated gas — the gas produced alongside crude — and that shortfall is now showing up in the power grid. Saudi Aramco disclosed in its latest quarterly earnings that gas output slipped to 10.5 billion cubic feet per day in the first quarter from 10.7 bcfd in Q4 2025, even after the December startup of the Jafurah unconventional gas field. The decline reverses years of effort to shift power plants off liquid fuels onto cleaner-burning gas. April's fuel oil cargoes discharged mainly at terminals tied to power and desalination plants — Jeddah South and Shuqaiq Steam — rather than storage, pointing to immediate burn. "The sharp increase in fuel oil imports is a leading indicator that oil burn will rise above year-ago levels," said Rahul Choudhary, an analyst at Rystad Energy. Choudhary estimates total oil burn for power generation could exceed 1 million bpd this summer, above the 991,000 bpd low of 2025. Saudi Arabia burned an average 593,500 bpd of crude directly for power between June and September last year, according to Joint Organisations Data Initiative data. The switch has a commercial logic. High-sulfur fuel oil trades at a discount to Arab Light crude, making it cheaper to burn domestically while Aramco routes the higher-value grade through the East-West pipeline to Yanbu on the Red Sea for export to European and Asian buyers. Wood Mackenzie expects that trade-off to limit crude burn, forecasting a decline of 5,000 to 15,000 bpd from last summer's 629,000 bpd average. "Every barrel of Arab Light crude burned domestically represents a significant loss in windfall export revenue," said WoodMac analyst Jayadev D. The broader situation continues to deteriorate. U.S. forces had redirected at least 91 commercial vessels and disabled four others as of Wednesday, enforcing a counter-blockade against Iranian shipping. Some 1,550 vessels from 87 countries remain stranded in the Gulf, according to U.S. Central Command. Brent stood at $110.95 on Tuesday, up 0.96%. The Hormuz strait handles around 21 million bpd — roughly one-fifth of global oil consumption. The pressure point arrives in July and August, when Saudi electricity demand peaks. If the closure holds into the third quarter, the kingdom will need either a meaningful ramp-up at Jafurah or sustained fuel oil imports to keep the grid stable. Any diplomatic opening that restores Ras Tanura exports would immediately lift associated gas volumes, potentially reversing the import surge almost overnight — the clearest near-term signal to watch.