Saudi Arabia Reroutes Oil After Houthi Red Sea Blockade

The Government of Saudi Arabia has rerouted crude oil exports and launched military airstrikes in Yemen after the Iran-backed Houthi movement declared a naval blockade of Saudi shipments in the southern Red Sea and Bab el-Mandeb Strait. The Houthis escalated the conflict by launching missile and drone strikes against Saudi-linked oil tankers, causing vessel traffic through the strait to hit a multi-month low.

To bypass the blockade, Saudi Arabia is shifting oil shipments from its Yanbu port to Egypt's Ain Sukhna port. The oil is then transported via the Suez-Mediterranean pipeline to the port of Sidi Kerir. From there, tankers must travel around Africa via the Cape of Good Hope to reach Asian markets, a detour that extends the journey by approximately one month and increases costs by roughly $10 million per cargo.

In response to these rising transportation costs, Saudi Aramco is considering increasing the price of crude oil shipped to Asia by up to $5 per barrel. These disruptions occur as the Red Sea serves as a critical passage for global energy supplies and amid broader tensions between the United States and Iran, which have already restricted vessel entry through the Strait of Hormuz.