Saudi Crude Oil Rerouted Through Egypt Amid Houthi Blockade

The recent Houthi blockade declaration in July has led to a significant shift in Saudi Arabia's oil export strategy, forcing the kingdom to reroute its crude oil via Egypt's pipeline infrastructure to bypass the contested Bab el-Mandeb Strait. The Sidi Kerir terminal on Egypt's Mediterranean coast has become a crucial hub for this new route, with an estimated 1.1 million barrels per day being transported through it since July 20.

The SUMED pipeline, which crosses Egyptian territory from Ain Sokhna to the Mediterranean coast, has played a key role in this bypass strategy. The Sidi Kerir terminal has seen peak loadings of approximately 2.3 million barrels per day in August, reflecting not only Saudi rerouted volumes but also other Mediterranean crude flows converging on the same export point.

The selective participation of tanker operators in the shuttle trade has created a two-tier structure in the market, with risk-premium freight rates applying to the Yanbu-to-Ain Sokhna leg. However, this new route is not without its limitations, as pipeline throughput capacity and physical constraints at Ain Sokhna terminal may hinder its ability to fully replace the direct Red Sea export corridor.