Saudi Arabia is actively seeking access to foreign government-held strategic oil storage facilities to enhance Aramco's supply resilience during regional disruptions. Aramco CEO Amin Nasser confirmed that Saudi Arabia's Energy Ministry is working with counterparts in other countries to make strategic storage available for the company, as reported by Al Arabiya. The initiative comes as commercial storage capacity through partners remains limited, with the larger capacity lying in government-owned strategic storage facilities. Aramco currently holds commercial oil storage in South Korea, Japan, the Netherlands, and Egypt's Mediterranean export hub of Sidi Kerir, which the company has maintained for many years but is now working to expand, particularly in Asia.
Saudi Aramco's term-contract negotiations with Asian oil refiners have encountered significant challenges due to disagreements over outstanding purchases in existing deals. According to traders involved in the discussions, the disputes represent a direct consequence of the ongoing West Asia war, which has disrupted regional oil flows and prevented customers from collecting contracted supplies. This has forced refiners to adopt a more opportunistic approach to purchasing Persian Gulf oil through the spot market, with the fundamental question being whether recent spot-market purchases can count toward refiners' annual contractual obligations for 2026.
The latest attacks have intensified market concerns, with Brent crude climbing above $112 a barrel on Thursday as violence heightened concerns about further disruptions to Saudi supplies. On Wednesday, attacks on Aramco's Shaybah oil field and Dammam airport each killed two people, according to Saudi authorities. To address increased demand, Aramco ramped up spot sales to Asia from early September, capitalizing on a recovery in flows through the Strait of Hormuz despite ongoing attacks on shipping vessels. However, the situation has become more complex as surging freight costs to ship crude out of the Middle East have reached $1.4 million a day, the most on record, driven by Iranian attacks on ships in the Strait of Hormuz.
The conflict has prompted Aramco to accelerate infrastructure development plans to increase resilience. Aramco CEO Amin Nasser announced that the company is conducting engineering studies to increase its capacity to move crude from the Persian Gulf in the east to the Red Sea in the west to 10 million barrels a day from 7 million, alongside work on other routes. The company currently operates three main export corridors — the Strait of Hormuz, the Red Sea, and Bab el-Mandeb, and Sidi Kerir on the Mediterranean. Nasser emphasized that "we did not wait for the crisis to end," stating that building resilience requires "decades of investment and preparation."
The dispute is creating broader market effects, slowing down purchases of Saudi crude and oil from other West Asian producers. Term-contract discussions for the coming year typically conclude by the end of October, as Asian refiners typically order January-loading West Asian crude from the spot market in November and require knowing their term contract commitments before making buying decisions. The uncertainty over how Asian refiners will source oil from West Asia will persist until the security situation in the region stabilizes, with the US and Iran remaining at odds over key issues including control over the Strait of Hormuz.
