War has disrupted the supply chain of the world's largest crude oil exporter. In a rare move, Saudi Aramco recently offered crude oil for sale via tender on the spot market, reflecting the profound impact Middle East conflicts are having on crude trade flows.

According to Bloomberg, citing traders familiar with the matter, Saudi Aramco has issued sell indications for Arab Super Light, Arab Heavy, and its flagship grade Arab Light crude. The total volume listed for these three grades in recent days amounts to approximately 4.6 million barrels.

The effective closure of the Strait of Hormuz has trapped numerous cargo vessels, forcing Saudi Arabia to reroute crude exports via the Red Sea. This has prompted the unusual spot market sales initiative.

Evidence of this adjustment is visible in shipping data. Vessel-tracking data compiled by Bloomberg shows that shipments from Saudi Arabia's western ports so far this month have climbed to around 2.3 million barrels per day. This represents an increase of roughly 50% compared to shipments from these terminals in any single month since late 2016.

The spot tender breaks with standard practice by covering three main crude grades. Saudi Aramco typically supplies crude to customers solely through long-term contracts, making a public tender on the spot market a highly unusual action. The direct reason for resorting to spot channels is the blockage of the Strait of Hormuz, which has prevented the normal flow of contracted cargoes that would typically be delivered via conventional routes.

According to the Bloomberg report, traders familiar with the situation indicated that the grades involved in this tender include Arab Super Light, Arab Heavy, and the flagship Arab Light crude. The total supply volume across these grades in recent days is approximately 4.6 million barrels. The specific pricing and volume information has not been officially confirmed.

Faced with the obstruction at the Strait of Hormuz, Saudi Arabia has chosen to transport an unprecedented volume of crude via pipeline to the Yanbu port on the Red Sea coast for re-export.

Bloomberg's ship-tracking data indicates that the shipment rate from western ports this month is about fifty percent higher than comparable periods in recent years. This sharp increase fully reflects the urgency of Saudi Arabia's efforts to reconfigure export routes and also signifies that Red Sea shipping lanes are under unusual traffic pressure.

The tender prices were set at a premium to the March Official Selling Price (OSP) benchmarks. Since the OSPs were determined approximately a month ago, before the outbreak of the Middle East war, the current spot premium partly reflects the additional risk premium arising from supply disruptions.

For participants in the crude oil market, Saudi Aramco's rare spot tender activity, along with the accompanying premium pricing, serves as a significant signal for gauging current supply pressures and the degree of market tightness.