Aramco Considers Separate Mediterranean OSP for Chinese Buyers as Red Sea Routes Stay Blocked
A dedicated Sidi Kerir official selling price would shift Red Sea bypass freight costs from ad-hoc negotiation into Aramco's published price structure for Asian buyers.
Saudi Aramco has told at least two Chinese refiners it may introduce a separate official selling price for crude loaded at Sidi Kerir, Egypt's Mediterranean terminal, traders told Rigzone on Wednesday (2026-07-29), as the company seeks a durable pricing solution to the disruption Houthi attacks on Red Sea shipping have created.7
Sidi Kerir sits at the northern end of the SUMED pipeline, which carries crude from the Red Sea port of Ain Sokhna to Egypt's Mediterranean coast at a capacity of around 2.5 million barrels per day. For Asian buyers, crude loaded there requires a voyage around Africa rather than through the Suez Canal, adding weeks to transit times and substantial freight cost. A dedicated OSP would embed that freight differential into a published figure rather than leave it as a case-by-case adjustment on top of the standard Arab Light or Arab Medium grade price.6,7
The routing discussions predate the OSP proposal by several weeks. By Thursday (2026-07-23), at least two Asian refiners had entered active talks with Aramco about rerouting cargoes around Africa entirely, traders said. ICE Brent crude front-month was trading above $98 per barrel at that point, up more than 33% in a month. By Friday's close (2026-07-31), it had retreated to $83.68 — Houthi attacks have not stopped, but supply found alternative routes fast enough to take some urgency out of crude prices, and Chinese demand has not recovered to levels that would sustain a $98 market.6
Aramco cut its Asian OSPs in successive monthly reductions through this period. A second consecutive monthly reduction for July-loading crude was widely expected by early June (2026-06-08), oilprice.com reported, as weak Chinese demand and narrowing spreads pressed the market. On Monday (2026-07-06), as OPEC+ approved another production target increase beginning in August, oil settled near pre-Iran-war levels — demand signals from Asia overrode the supply disruption narrative.1,3,2
Chinese buying from Saudi Arabia has been quietly deteriorating. Some refiners did not nominate term Saudi crude cargoes for August, while others received no allocation for the month, oilprice.com reported on Tuesday (2026-07-14), with weak domestic demand, competition from alternative producers, and Red Sea uncertainty all cited.4
Chinese refiners holding existing Middle East cargoes added to the pressure. Some were offering those barrels for resale on Wednesday (2026-07-22), traders said — crude that had already cleared the Gulf and could reach buyers faster and at lower freight cost than fresh cargoes routed around Africa.5
A Sidi Kerir OSP would, in theory, bring order to the current patchwork of informal arrangements. It gives buyers a transparent published price for the bypass route and removes the friction of case-by-case freight negotiations. But Chinese refiners cutting term allocations and reselling existing barrels are not behaving like buyers eager for a new pricing structure. They are behaving like buyers with options, shopping between Saudi term volumes, spot Russian supply, and opportunistic resale crude.
UAE output reinforces that optionality. Abu Dhabi raised production to near-record highs above 3.8 million barrels per day in June after quitting OPEC to escape production caps, according to two people familiar with production data cited on Monday (2026-07-06). That additional supply at competitive prices reduces Chinese refiners' dependence on Saudi term volumes even as Aramco attempts to redesign how it prices them.2
Aramco used the word "may." The traders who disclosed the conversations asked not to be named as they are not authorised to speak to media, so the proposal remains unverified beyond their account. The next concrete test is Aramco's September OSP publication for Arab crude grades to Asia — whether a Sidi Kerir differential appears in that document, and at what spread to the standard Gulf loading price, will show buyers and traders whether this is a permanent fixture or a trial balloon floated at a moment of maximum logistical stress.7