Middle East War Redraws Global Oil Trade Map
The ongoing war in the Middle East is forcing oil exporters to diversify their routes and importers to seek alternative suppliers, transforming the global oil trade landscape. The Strait of Hormuz, a critical chokepoint for crude oil exports, has seen its daily flows plummet from nearly 20 million barrels to between 6 and 8 million barrels due to US and Israeli strikes on Iran.
The Bab el-Mandeb Strait is becoming an alternative route, with Saudi Arabia reversing the flow of its East-West pipeline to transport oil to the west, rather than through the Hormuz Strait. However, this redirection has come at a cost, with the port of Yanbu unable to handle the increased volume. The UAE has redirected its flows to the Fujairah port, but ADNOC plans to double the capacity of its pipeline to Fujairah by next year.
The global energy import bill has surged by $330 billion over six months due to rising oil and gas prices, with Brent crude and West Texas Intermediate trading above $90 per barrel. Asian energy importers, particularly Japan, are seeking alternative suppliers as the war disrupts traditional trade routes, forcing them to pay higher prices for their imports.