Saudi Arabia Reroutes Oil Shipments Amid Houthi Rebel Threats

Saudi Arabia's crude shipping routes are being adjusted due to threats from Yemen's Houthi rebels. The Iran-aligned group has declared a maritime blockade targeting ships linked to Saudi Arabia and continued attacks in the Red Sea.

The Bab el-Mandeb Strait at the southern end of the Red Sea, which was previously used for oil exports, is no longer considered safe. As a result, Saudi Arabia is rerouting its crude shipments through an Egyptian pipeline, adding two to four weeks to transit times and increasing fuel costs by at least $5 per barrel.

The increased use of the SUMED pipeline has led to a significant increase in crude exports via this route, with shipments averaging 2.1 million barrels per day this month, triple the first-half average. However, this means that crude destined for Asia must be shipped around the southern tip of Africa, resulting in higher costs and longer transit times.