Middle East Crisis Sparks Energy Chaos
The crisis in the Middle East has taken on a clear geoeconomic dimension, disrupting seaborne oil transport and threatening the global energy market. The region's main energy arteries have been severely impacted, limiting Saudi Arabia's export capabilities and increasing transport costs.
The Bab el-Mandeb Strait, through which 12% of seaborne oil shipments and nearly 8% of global LNG trade transit, has been restricted due to the deteriorating security situation. This has forced Saudi Arabia to seek alternative solutions to secure navigation, including a maritime defense coalition involving over 40 countries.
The Suez Canal is now the only reliable alternative for Saudi exports, but its limited depth prevents fully loaded supertankers from passing through. As a result, large tankers are being forced to offload part of their cargo via the Egyptian SUMED pipeline, leading to significant delays and costs for Asian importers.
The crisis is not limited to transport alone, with Saudi Aramco suspending operations at its refinery in Jeddah due to attacks on energy facilities. This has reduced the country's production capacity and put additional pressure on both crude oil and refined product markets.