Key facts
- The VLCC DHT Stallion is rerouting around Africa to avoid Red Sea risks.
- Saudi Arabia's East-West Pipeline delivers crude to Yanbu on the Red Sea, but exports from Yanbu are now challenged.
- The Bab el-Mandeb strait is currently inaccessible due to Houthi threats.
- Fully loaded VLCCs cannot transit the Suez Canal due to draft restrictions.
- Egypt's SUMED pipeline has limited capacity to handle diverted crude volumes.
- Congestion is expected at Suez Canal transit points and terminals.
The VLCC DHT Stallion is rerouting around the Cape of Good Hope to avoid risks in the Red Sea, a move that highlights the growing logistical challenges for Saudi Arabia's oil exports. For years, the East-West Pipeline to Yanbu on the Red Sea was seen as a strategic alternative to the Strait of Hormuz. However, the current Houthi blockade of the Bab el-Mandeb strait has exposed a critical weakness in this assumption, as crude reaching Yanbu still needs to exit the Red Sea.
While tankers can transit the Suez Canal, this route is not designed to handle the several million barrels per day of Saudi crude, refined products, and petrochemical exports that previously used Bab el-Mandeb. Fully loaded VLCCs, the backbone of Saudi export logistics, cannot transit the Suez Canal due to draft restrictions. The SUMED pipeline, which allows for partial discharge and reloading of VLCCs, has an effective throughput of 2.3 to 2.5 million barrels per day, falling short of the capacity needed to accommodate potential diversions from Yanbu.
This situation is expected to create significant congestion and demurrage at the SUMED pipeline's terminals in Ain Sokhna and Sidi Kerir. The Suez Canal itself, a busy maritime corridor, will also face increased delays as additional crude carriers and product tankers compete for transit slots. For Asian buyers, this rerouting means a much longer voyage around Africa, significantly increasing transit times and costs. The disruption is also expected to impact refined petroleum products, tightening regional inventories and increasing wholesale prices faster than crude supply interruptions.