Key facts
- Saudi Arabia may raise crude oil prices for Asia by up to $5 per barrel due to increased shipping costs.
- The Houthi blockade has caused a significant slump in tanker traffic through the Red Sea and Bab-el-Mandeb Strait.
- Tanker rerouting around Africa adds approximately one month to transit times and an estimated $10 million per cargo.
- At least eight very large crude carriers (VLCCs) are signaling Sidi Kerir port as their destination.
- Traffic through the Bab-el-Mandeb Strait has fallen by more than 70%.
Asia faces a worsening energy crisis as the Houthi blockade of the Red Sea disrupts crucial oil supply routes. Saudi Arabia is reportedly considering raising the price of crude oil destined for Asia to reflect the significantly higher shipping costs associated with rerouting tankers. This rerouting, which involves sending oil via the Suez Canal and then around Africa, adds about a month to transit times and an estimated $10 million per cargo.
The blockade has materially slowed traffic through the Bab el-Mandeb Strait, a vital chokepoint for oil exports. At least eight very large crude carriers (VLCCs) are signaling the port of Sidi Kerir as their destination, with all expected to arrive in the coming two to three weeks. No observable tankers were at the Saudi port of Yanbu on the Red Sea as of early Tuesday, likely due to tankers switching off transponders to avoid Houthi targets.
The Houthi threats to shipping in the Red Sea and Bab el-Mandeb have already forced at least one oil tanker carrying Saudi crude to Asia to choose the much longer route through the Suez Canal, the Mediterranean, and around Africa. Tanker traffic through Bab el-Mandeb slumped to a multi-month low on Sunday, while traffic at the Strait of Hormuz remains subdued at a two-month low.