Saudi Arabia has diverted millions of barrels of crude oil to its Red Sea ports, tripling export volumes from its western coast this month to maintain global supplies as the conflict involving Iran disrupts shipments through the Strait of Hormuz.
Tanker tracking data compiled by Bloomberg shows five very large crude carriers (VLCCs) loaded at the port of Yanbu during the first four days of March, carrying approximately 10m barrels of oil. This has raised average shipments from the Red Sea to 2.5m barrels per day (bpd), compared to 786,000 bpd in February. While loading continues at Ras Tanura in the Arabian Gulf, the war has prevented shipments from leaving the region at the usual pace.
The conflict is restricting a significant portion of the region’s oil, fuel, and gas supplies. While Saudi Arabia can divert much of its crude, other regional producers face a rapidly closing window to resume exports via the Strait of Hormuz. If the waterway is not reopened to allow empty tankers into the Gulf, storage capacities for crude and refined products will be exhausted, forcing production cuts.
Iraq, the region’s second-largest producer, has already begun cutting output as a lack of available tankers forced a halt at its largest fields. Analysts at JPMorgan warned that other producers, such as Kuwait, could face a similar situation in less than two weeks.
Saudi Aramco said on Wednesday it is transporting export volumes from its main eastern production areas via pipelines to Red Sea ports. Theoretically, this pipeline system has the capacity to carry the majority of Saudi Arabia’s daily crude exports of approximately 7m barrels.
However, the Red Sea route remains risky, particularly for Asia-bound voyages. Vessels using Yanbu must still navigate the Bab el-Mandeb strait, where Iran-backed Houthi militants in Yemen only recently paused drone and missile attacks that had disrupted shipping for the past two years.
Other regional players are also seeking alternatives. The United Arab Emirates is exporting more than 1m bpd of crude via the port of Fujairah, located outside the Strait of Hormuz. While the linked pipeline has a capacity of 1.5m bpd, this remains significantly below the total UAE export programme.
In Cairo, Egyptian Petroleum Minister Karim Badawi said on Tuesday that Egypt is capable of facilitating the transport of crude oil via the Sumed pipeline, which connects the Red Sea to the Mediterranean. This comes as oil companies informed some customers of plans to load Arabian Light crude from the Red Sea coast.
Market pressures have intensified as regional storage tanks at refineries and oil fields reach capacity. Brent crude futures have risen approximately 16% since Friday’s close, surpassing $80 per barrel this week for the first time in over a year. European gas prices have seen even sharper increases after Qatar, a major exporter, cut production and declared force majeure at its primary liquefied natural gas facility following attacks that also halted operations at Saudi Arabia’s Ras Tanura refinery.
