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Houthi Blockade Reshapes Saudi Oil Shipping
The Houthi movement's newly declared maritime blockade against Saudi Arabia is creating fresh challenges for tanker operators and oil exporters, forcing the market to reassess shipping routes from the Red Sea to Asia.
The latest escalation follows attacks on Saudi-linked tankers and raises new questions about the reliability of one of the region's most important energy export corridors.
Saudi Tankers Come Under Attack
The Houthis announced a maritime embargo on Saudi Arabia on 19 July, describing it as retaliation for Saudi restrictions on Yemen and a recent strike on Sanaa International Airport.
Three days later, the group claimed attacks on two Saudi oil tankers, Encelia and Layla. Maritime security reports confirmed that Encelia sustained damage after being struck, while the reported attack on Layla has not been independently verified.
Saudi Arabia later responded with strikes on Yemen's port of Hodeidah, adding to tensions across the Red Sea.
Hormuz Diversions Shifted Exports to Yanbu
Following the disruption of traffic through the Strait of Hormuz, Saudi Arabia significantly increased crude shipments through its East-West Pipeline, transporting oil to Yanbu on the Red Sea coast.
Industry estimates indicate that Yanbu exported more than 4 million barrels per day during June and early July, compared with less than 1 million barrels per day during the same period a year earlier.
The change allowed Saudi Arabia to redirect exports away from Gulf terminals, but it also increased dependence on shipping routes through the Bab el-Mandeb Strait.
Alternative Routes Bring Higher Costs
Market participants are now assessing alternative export options should security risks continue to increase around Bab el-Mandeb.
One solution involves using Egypt's SUMED Pipeline, allowing VLCCs to transfer part of their cargo across Egypt before continuing through the Mediterranean.
Another option is to employ Suezmax tankers, which can transit the Suez Canal without the draft restrictions faced by fully laden VLCCs.
While both solutions remain technically feasible, they require additional logistics and reduce overall transport efficiency.
Longer Voyages Could Tighten Tanker Supply
Routing Saudi crude to Asian buyers through the Mediterranean instead of the Red Sea would significantly extend voyage durations.
For example, shipments from Yanbu to South Korea could increase from around 24 days to approximately 54 days. Longer voyages would require more vessels to move the same cargo volumes, increasing tonne-mile demand and reducing available tanker capacity.
Higher transportation costs could also raise the delivered price of Saudi crude for Asian importers.
Tanker Market Faces New Uncertainty
If shipowners continue avoiding the Bab el-Mandeb Strait, tanker trade patterns could change considerably.
Saudi crude exports may shift towards European markets, while Atlantic Basin supplies move east to replace disrupted cargoes. At the same time, demand for Suezmax tankers could increase as operators seek more flexible routing options.
Although oil exports are expected to continue, the evolving security situation is likely to make global tanker logistics more complex and costly in the months ahead.
