Saudi Arabia reroutes crude exports as Houthis threaten Red Sea shipping

Saudi Arabia has overhauled its crude export logistics after Yemen's Houthi militants announced a blockade of Saudi ports in July, forcing tankers to avoid the Bab al-Mandab strait and seek alternative routes that more than double voyage distances to roughly 17,000 miles (about 27,000 kilometers).

The disruption follows Iran's effective closure of the Strait of Hormuz, which had already compelled Saudi Arabia to shift crude exports to its west-coast Yanbu facilities on the Red Sea. With Yanbu now also under threat from the Iran-backed Houthis, the kingdom is arranging a further set of workarounds.

Many tankers collecting oil at Yanbu have been sailing north through the Suez Canal to Egypt's Mediterranean port of Sidi Kerir rather than passing through the Bab al-Mandab. Asian buyers then take delivery there, with cargoes traveling onward around Africa. Over the past week, several Asian refiners pushed back against a Saudi Aramco request that they collect directly from Yanbu, citing difficulty finding ships willing to call there, and asked instead to load at Sidi Kerir.

Getting crude to Sidi Kerir requires moving it across the Red Sea and through Egypt, either via the Suez Canal or a pipeline crossing the country. The canal is too shallow for fully laden supertankers, and the pipeline cannot handle all the Saudi crude that Asia would normally buy. Over the past month, vessels controlled by South Korea's Sinokor Group, Greece's Dynacom Tankers Management, and Norway's DHT Management have been observed shuttling cargoes from Yanbu to Ain Sukhna at the southern end of the pipeline.

Saudi Arabia has separately begun offering Chinese customers the option of collecting crude from the Gulf of Oman, just outside the Persian Gulf. Satellite images and ship-tracking data show a large cluster of Saudi oil tankers waiting in the Gulf of Oman and increased activity at Saudi ports inside the Persian Gulf. Three of four supertankers that carried approximately 8 million barrels from Saudi gulf ports since Aug. 11 were owned by Sinokor, according to shipping data.

The additional logistics costs are affecting purchasing decisions. At least one East Asian refiner is considering dropping its Saudi oil loading for next month because of the added expense. By contrast, Japanese and South Korean refiners are largely set to collect their September allocations from Sidi Kerir, according to traders, with energy security concerns outweighing higher costs. European refineries received their full September allocations of Saudi crude over the past week, reportedly benefiting from the extra burden Asia is bearing.

• The source does not state the precise date the Houthis announced their blockade of Saudi ports, beyond placing it in July.
• The source does not state the total volume of Saudi crude currently being diverted through alternative routes.
• The source does not state the quantified additional cost per barrel that the logistics overhaul is adding to delivered crude prices.
• The source does not state the capacity of the Egypt pipeline relative to normal Saudi export volumes to Asia.
• The source does not state the current overall level of Saudi exports as a specific figure, only that they remain below prewar levels.
• The source does not state whether the Houthi blockade announcement has been enforced by actual attacks on Saudi tankers or remains a declared threat.

1. The Japan Times — original

Read the original at The Japan Times

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