Saudi Aramco Abandons Term Contracts for Spot Sales as 10 Million Barrels Clear Reopened Hormuz, Four VLCCs Loading at Ras Tanura

Saudi Aramco has cleared approximately 10 million barrels of crude through the reopened Strait of Hormuz in recent days. Five supertankers from its Ras Tanura export terminal have already transited the strait, with two heading to China and two to Japan, according to shipping data reported by Reuters. Four more very large crude carriers are positioned at Ras Tanura, at least one already laden.

Aramco rarely moves this fast. The company typically sells crude under long-term contracts priced against official selling prices, known as OSPs, which set monthly differentials to benchmark grades for specific buyer regions. For the current cargo, Aramco has offered spot sales at discounts Reuters described as "very attractive" for Chinese buyers.

Aramco as Saudi Arabia's Export Instrument

Saudi Aramco is 98.5% owned by the Saudi government, making it both a commercial enterprise and the Kingdom's primary policy tool for crude oil production and export. When Aramco pivots to spot sales, it reflects a government-level strategic choice, not just a commercial trading decision. Saudi Arabia is choosing volume over price, signaling a determination to recapture Asian market share before Middle East prompt supply fully normalizes.

During the Hormuz closure, Saudi Arabia maximized throughput via its East-West pipeline, routing crude from the Gulf coast to the Red Sea port of Yanbu. That bypass proved costly and volume-limited. The Hormuz reopening allows Aramco to shift back to Ras Tanura, its largest and most efficient export terminal. Aramco can now move crude faster, cheaper, and in larger VLCC parcels than the pipeline-to-Yanbu arrangement allowed.

The Supply Math: Roughly $1.3 Billion in Transit and Loading

At Thursday's ICE Brent settlement of $72.12 per barrel, the 10 million barrels already cleared represent roughly $721 million of Saudi crude delivered or en route to Asia. The four VLCCs still loading at Ras Tanura carry approximately 2 million barrels each, adding roughly $577 million of cargo at the terminal. Combined, approximately $1.3 billion in Saudi crude is either in transit through Hormuz or actively loading at Ras Tanura.

This reflects the export recovery pace Citi and Goldman Sachs cited as the core driver of their $60 Brent forecasts. Saudi Arabia's exports have rebounded to approximately 90% of pre-war levels, according to Reuters. The remaining 10% represents additional supply capacity if Hormuz traffic fully normalizes to its pre-war baseline of 130 daily transits from today's 30 to 60.

OPEC June Output and the Remaining Gap

OPEC's 11 members produced 19.43 million barrels per day in June 2026, up 3.3 million bpd from May, according to a Reuters monthly production survey. May output hit its lowest level since at least 2000, held down by Hormuz disruptions that blocked Gulf tanker loading. Kuwait and Iran led June's recovery, with Iran restoring production after the US lifted its naval blockade.

A production gap versus pre-war levels remains. As Oil Authority reported on July 4, Iraq's output runs 2.24 million barrels per day below pre-war levels. OPEC+ approved a further 188,000 bpd increase for August. That increment addresses less than 10% of Iraq's remaining deficit alone, before accounting for gaps in Kuwait, UAE, and Iran. Full OPEC recovery, if it arrives, would add several million barrels per day to a market Goldman Sachs already projects at a 3 million bpd surplus for 2027.

What the Spot Sale Shift Signals

Saudi Aramco's standard practice is to publish monthly OSP adjustments for each destination region and sell to long-term buyers under multi-year contracts. Spot sales are a departure Aramco reserves for surplus periods or strategic market-share campaigns. The last comparable precedent was the 2020 price war with Russia, when Aramco cut OSPs by several dollars per barrel to flood Asian and European markets at the height of the COVID demand collapse.

Today's context differs from 2020. This is not a price war targeting a competitor. Aramco is moving stranded cargo through a reopened chokepoint to rebuild Asian customer relationships disrupted by months of limited supply. Whether Aramco reverts to term OSP pricing once the backlog clears is the key question for its pricing discipline. A sustained shift toward spot selling would coincide with the 3 million bpd surplus Goldman Sachs projects for 2027, putting further pressure on Brent.