Key facts
- Saudi Arabia is rerouting oil exports to bypass the Strait of Hormuz and the Houthi blockade in the Red Sea.
- The kingdom is now utilizing the Suez Canal and the SUMED pipeline for its exports.
- The SUMED pipeline has a capacity of 2.5 million barrels per day, and the Suez Canal handles about 1 million barrels daily, posing capacity limitations.
- Earlier, Saudi Arabia had redirected its oil to the Red Sea port of Yanbu, which experienced a significant surge in exports before declining.
- Two LNG tankers in Damietta, Egypt, were struck by drones.
Saudi Arabia is once again rerouting its oil exports, this time via the Suez Canal and the SUMED pipeline, as security threats in the Red Sea have intensified due to Houthi blockades. This follows earlier disruptions in the Strait of Hormuz, which had already forced the kingdom to shift significant volumes to its Red Sea port of Yanbu.
Initially, Saudi Arabia redirected its onshore Arab Light volumes from the Persian Gulf to the Petroline, which transports crude to Yanbu on the western coast. This led to a substantial surge in Yanbu's oil exports, reaching approximately 2.47 million barrels per day, a 330% increase compared to pre-war levels, according to Windward data. By April, daily shipments from Yanbu exceeded 4 million barrels.
However, Saudi oil flows from the southern Red Sea port declined by June, falling to around 2.39 million barrels daily. This decrease may have been influenced by a temporary resumption of traffic through the Strait of Hormuz, followed by renewed missile strikes after a ceasefire deal between Iran and the United States collapsed. The Houthi group declared a blockade on Saudi vessels last week, further complicating the Red Sea route.
With the Strait of Hormuz remaining a high-risk area and the Red Sea route now compromised, Saudi Arabia's options are limited. The country is now relying on the Suez Canal and the SUMED pipeline, which has a capacity of 2.5 million barrels per day. While theoretically capable of rerouting about half of its previous flows, this capacity is insufficient to fully compensate for the loss of access through the Persian Gulf and the East-West pipeline. The Suez Canal itself can only handle approximately 1 million barrels daily. This situation suggests that Saudi oil exports may shrink in the coming weeks unless the Houthi blockade is lifted.
In a related incident, two LNG tankers in the Egyptian port of Damietta were struck by drones, highlighting the broader security risks in the region. Energy analysts warn that persistent disruptions to the Strait of Hormuz and the Red Sea could lead to tighter global supply chains, increased shipping costs, and upward pressure on oil prices.