Can the Suez save Asian oil consumers after Houthis shut Bab al-Mandeb?
Houthi blockade threats in the Red Sea have prompted two Saudi crude tankers to reverse course, risking approximately 6 million barrels daily destined for Asia. Asian refiners are exploring an alternative route through Egypt's Suez Canal and around Africa's Cape of Good Hope, though this would significantly extend delivery times and increase costs.
Shipping disruptions in the Red Sea have created fresh challenges for global oil supply chains. Two vessels—the Rodos and Xin Long Yang—carrying a combined 2.8 million barrels from Saudi Arabia's Yanbu port reversed direction after Yemen's Houthis announced a blockade, according to shipping analytics firm Kpler. The move signals that Houthi threats are beginning to materially affect Saudi crude exports and expose vulnerabilities in Riyadh's energy trade protection amid broader regional tensions.
Saudi Arabia had previously mitigated Strait of Hormuz disruptions by routing oil through pipelines to Yanbu on the Red Sea coast. However, with Bab al-Mandeb now facing security risks, this alternative corridor faces its own constraints. The kingdom's export flexibility is narrowing as two critical chokepoints simultaneously experience pressure.
Asian refiners are now evaluating an exceptionally circuitous alternative: routing oil northwest from Yanbu through Egypt's Suez Canal into the Mediterranean, then around Africa's Cape of Good Hope to reach Asian markets. While this route could maintain some Saudi crude flow if Bab al-Mandeb becomes impassable, it carries substantial drawbacks. The journey would add weeks to transit times, substantially increase freight and fuel expenses, and create logistical complications that could constrain Saudi export volumes.
The Red Sea threat compounds existing disruptions in the Strait of Hormuz, where traffic has collapsed due to US-Iran tensions. Before the conflict, approximately one-fifth of global oil and liquefied natural gas supplies transited the waterway. Current data shows only three commodity vessels recorded passage on a recent Tuesday, with no very large crude carriers or liquefied natural gas tankers sighted. This dual-route pressure creates differentiated exposure across Gulf producers: Iraq, Qatar, Kuwait, and Bahrain depend almost entirely on Hormuz for exports, while Saudi Arabia and the United Arab Emirates, though heavily reliant, possess some pipeline alternatives.
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