Saudi Arabia Reroutes Oil Exports via Suez as Red Sea Disruption Raises Costs

Saudi Arabia is diverting oil exports away from the Strait of Hormuz and the Bab el-Mandeb Strait and sending shipments via Egypt’s Suez Canal around Africa because Middle East fighting has disrupted shipping, according to Jiemian News. The rerouting is adding about one month to transport time and roughly doubling freight costs.

Data from Kpler and LSEG shipping research show a tanker sailing from Yanbu, Saudi Arabia’s Red Sea port, to Asia normally takes 19 days through the Bab el-Mandeb route, compared with 48 days via the Suez Canal, the Mediterranean, the Strait of Gibraltar and the Cape of Good Hope. Fuel costs on the longer route rise from $1.26 million to about $2.87 million, and the voyage also requires about $1 million in Suez Canal transit fees.

Because large oil tankers must travel only partially loaded through the Suez Canal due to depth limits, Saudi Arabia can also move some crude through the Sumed pipeline, which links Egypt’s Ain Sokhna port on the Red Sea with Sidi Kerir on the Mediterranean. The 320-kilometer pipeline has a daily capacity of 2.5 million barrels. Before the Iran war, Saudi Arabia’s total daily oil exports were about 7 million barrels, and Saudi Aramco has started increasing crude flows through the Sumed pipeline. Trade sources said on July 23 that Aramco had also begun offering additional spot crude cargoes from Sidi Kerir to some long-term customers in Europe and North America.