Can the Suez save Asian oil consumers after Houthis shut Bab al-Mandeb?
About 6 million barrels of crude per day that pass through the strait to Asia are now at risk, experts say. Two tankers carrying Saudi
About 6 million barrels of crude per day that pass through the strait to Asia are now at risk, experts say. Two tankers carrying Saudi crude to Asia have reversed course in the Red Sea after Yemen’s Houthis announced a blockade of Saudi ports, raising fears that disruptions to another of the world’s most important shipping routes could further restrict global oil supplies. The vessels, the Rodos and Xin Long Yang, were carrying a combined 2.8 million barrels of oil from Saudi Arabia’s western port of Yanbu when they turned north after initially sailing towards Bab al-Mandeb, the strait that separates Yemen from the Horn of Africa, according to the shipping analytics firm Kpler. Their movements are the first visible sign that the Houthi threat is beginning to affect Saudi oil exports. They also expose a growing weakness in Riyadh’s efforts to protect its energy trade from the United States-Israel war on Iran. Saudi Arabia had been able to partially bypass disruptions in the Strait of Hormuz by transporting crude through pipelines to Yanbu on the Red Sea. But with shipping through Bab al-Mandeb now also under threat, the alternative corridor that helped reduce the kingdom’s dependence on Hormuz faces its own security risks. Asian refiners are now considering an exceptionally long diversion: sending oil northwest from Yanbu, through Egypt’s Suez Canal and into the Mediterranean before sailing around Africa and the Cape of Good Hope and on to Asia. The route could keep some Saudi crude moving if Bab al-Mandeb becomes impassable. But it would add weeks to delivery times, substantially increase freight and fuel costs, and create logistical problems that could limit how much oil Saudi Arabia is able to export. So can the Suez Canal offer a route that can carry oil quickly and affordably enough to prevent a deeper supply shock for Asian consumers while preventing oil prices from spiking to above $100 a barrel? Here’s what we know Two crucial waterways under pressure The threat in the Red Sea comes as shipping through the Strait of Hormuz is already severely disrupted by the conflict between Washington and Tehran. Before the war, about one-fifth of the world’s oil and liquefied natural gas supplies passed through the narrow waterway, which connects Gulf producers with international markets. But traffic has fallen sharply as Iran restricts passage through the strait and the US blocks vessels travelling to and from Iranian ports and coastal areas. Only three commodity vessels were recorded sailing through the Strait of Hormuz on Tuesday, down from four a day earlier, according to Kpler data. No very large crude carriers or liquefied natural gas tankers were sighted passing through the strait, leaving Gulf exporters with sharply different levels of exposure. Iraq, Qatar, Kuwait and Bahrain depend almost entirely on Hormuz to export their oil or liquefied natural gas.
The BriefWire