Saudi Arabia, the world’s largest oil exporter, is readjusting its crude shipping routes. As Yemen’s Houthi rebels have recently threatened even the Red Sea lanes, it is increasing detours that use an Egyptian pipeline while also turning again to the Persian Gulf’s Strait of Hormuz route.

On the 26th, according to the New York Times (NYT) and Bloomberg, Saudi Arabia has recently slashed crude shipments through the Bab el-Mandeb Strait at the southern end of the Red Sea. That is because the Iran-aligned Houthi rebels in Yemen declared a maritime blockade last month targeting ships linked to Saudi Arabia and have continued attacks in the Red Sea.

When the Iran war broke out in February, Saudi Arabia moved crude produced at eastern oil fields to Yanbu on the Red Sea coast via the east–west pipeline. It then loaded the oil onto tankers and exported it to Europe and Asia via the Bab el-Mandeb Strait. But as even the Red Sea route has become risky, it is now forced to rework its export strategy.

One of the detours Saudi Arabia chose is to ship crude north along the Red Sea and send it to the Mediterranean via Egypt. Tankers discharge crude at Egypt’s Ain Sokhna terminal, which is sent through the SUMED pipeline to the Mediterranean port of Sidi Kerir.
According to shipping data firm Kpler, crude shipments via the SUMED pipeline have increased from under 650,000 barrels a day in June to more than 1.9 million barrels this month. Bloomberg’s tally shows that this month’s crude exports from Sidi Kerir averaged 2.1 million barrels a day, triple the first-half average of 700,000 barrels.

However, to send crude to Asia, including Korea, China, and Japan, via this route, ships must sail from the Mediterranean around the southern tip of Africa. As a result, transit times lengthen by two to four weeks, and fuel and operating costs increase by at least $5 per barrel, was found. Matt Smith, Kpler’s lead oil analyst, said, “Asia will have to source crude elsewhere or pay more.”

Saudi Arabia is also increasing crude loadings at export terminals in the Persian Gulf that had been subdued for a time. According to Sentinel satellite images from the European Union (EU), on the 25th four vessels were anchored at the Ras Tanura and Ju’aymah crude loading facilities on Saudi Arabia’s eastern Persian Gulf coast. The number of ships confirmed at the two facilities was the highest since late June.

Movements of tankers seeking to load crude in the Persian Gulf have also picked up. Data from Kpler and Vortexa show that over the weekend several empty very large crude carriers transited the Strait of Hormuz into the Persian Gulf to take on oil.

However, Saudi Arabia’s total crude exports remain below prewar levels. According to Bloomberg, an analysis of satellite images and ship signals shows that from the 1st to the 23rd of this month, crude exported from Saudi ports on the Persian Gulf and Red Sea averaged 3.23 million barrels a day. If the current trend continues, it will mark the lowest monthly exports since the Iran war began.

Neil Quilliam, a researcher at Chatham House, said, “Even the world’s most important oil exporter cannot fully escape the fallout when multiple maritime chokepoints are threatened simultaneously.”

Source: ChosunBiz