Key facts
- Saudi Arabia is rerouting oil exports via the Suez Canal due to disruptions in the Hormuz and Bab el-Mandeb straits.
- Journeys to Asia will now require circumnavigating Africa, adding about a month to transit times.
- The extended route is estimated to double fuel costs to $2.87 million per tanker.
- Suez Canal fees add an additional $1 million per crossing.
- Tankers may need to sail partially empty through the Suez Canal and top up in the Mediterranean.
- The Sumed pipeline offers an alternative for transferring oil between the Red Sea and Mediterranean.
Saudi Arabia is rerouting the majority of its oil exports through the Suez Canal and around the Cape of Good Hope due to disruptions in the Hormuz and Bab el-Mandeb straits, caused by Iran and Iran-allied Houthi militants. This change significantly extends journey times, particularly for Asian buyers, adding approximately one month to voyages that previously passed through the Bab el-Mandeb strait.
The longer route via Suez, the Mediterranean, and around Africa will take an estimated 48 days, compared to the 19 days previously required to reach Taiwan via Bab el-Mandeb. This extended transit will nearly double fuel costs, from an estimated $1.26 million to $2.87 million per tanker. Additionally, crossing the Suez Canal incurs fees of approximately $1 million.
Due to draft restrictions in the Suez Canal, larger tankers may need to sail partially empty and then top up their loads in the Mediterranean. To facilitate this, Saudi Arabia could utilize the Sumed pipeline, which connects the Red Sea to the Mediterranean and has a capacity of up to 2.5 million barrels per day, a significant portion of the kingdom's total 7 million barrels per day export volume.