Saudi Arabia Redirects Oil Exports Amid Ongoing Regional Instability

Saudi Arabia has been forced to reroute its oil exports once again due to ongoing regional instability. This latest workaround comes after attacks claimed by Yemen's Iranian-backed Houthi militants significantly cut back on shipping oil via the Bab el Mandeb Strait in the southern end of the Red Sea.

Instead, Saudi Arabia is directing its crude exports north in the Red Sea, unloading oil at a pipeline in Egypt that shuttles it to the Mediterranean Sea. This convoluted route is costlier and takes weeks longer for oil to reach markets in Asia, adding an extra $5 to the cost of a barrel of oil.

The use of alternative routes has exposed Saudi Arabia's vulnerability to regional instability, but experts say that the kingdom's ability to manage crises could actually reinforce confidence in its reliability as a supplier. The repeated need for new detours highlights the impact of the decision by the United States and Israel to attack Iran and Iran's subsequent retaliation on the energy business.

Saudi Aramco is seeking to expand the capacity of its East-West pipeline across the kingdom by 2 million barrels per day, according to analysts. The company's CEO, Amin H. Nasser, said that efforts are being made to add 'flexibility' to all three routes.