- Saudi Arabia may raise the price of the crude it ships to Asia via the Suez Canal, reflecting higher shipping costs due to the Houthi maritime blockade in the Red Sea.
- The price hike could reach $5 per barrel of crude.
- Traffic through the Bab el-Mandeb Strait has materially slowed, prompting some vessel owners to reroute their tankers northward in the Red Sea toward the Suez Canal.
- The supertanker Olympic Luck, partially laden with Saudi crude at Yanbu on the Red Sea, transited the Suez Canal into the Mediterranean late on Sunday.
- The Suez-Africa route to Asia makes the journey about a month longer than if tankers travel through Bab el-Mandeb.
- Since the Iran war began, the kingdom has ramped up exports across the country to its Red Sea coast, bypassing the Strait of Hormuz.
- Threats from Houthi militants risk choking off the workaround, forcing more Saudi barrels onto a longer, costlier journey through the Suez Canal and around Africa.
Saudi Arabia's oil exports are facing significant challenges as the Houthi blockade in the Red Sea leads to increased shipping costs. Reports indicate that the price of crude oil shipped to Asia could rise by $5 per barrel due to these disruptions.12
The blockade has caused a material slowdown in traffic through the Bab el-Mandeb Strait, a critical route for Saudi oil. As a result, some vessel owners are rerouting their tankers northward toward the Suez Canal, which adds both time and cost to the shipping process. Rerouting could cost an additional $10 million per cargo, according to sources.3
The Suez-Africa route to Asia is approximately one month longer than the direct route through Bab el-Mandeb, complicating logistics further. The supertanker Olympic Luck, carrying Saudi crude, recently transited the Suez Canal, highlighting the shift in shipping patterns.45
Since the onset of the Iran war, Saudi Arabia has increased its oil exports via the Red Sea, avoiding the Strait of Hormuz. However, the ongoing threats from Houthi militants now jeopardize this workaround, forcing Saudi Arabia to consider more costly and technically challenging routes for its oil shipments.67
“The rerouting of tankers through the Suez Canal could cost an additional $10 million per cargo, as traffic through the Bab el-Mandeb Strait has materially slowed. This shift is significant as Saudi Arabia has ramped up exports through the Red Sea to bypass the Strait of Hormuz amid ongoing regional tensions.”
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