Saudi Oil Exports Face Growing Constraints Amid Houthi Attacks

Saudi Arabia's oil revenue gains may be masking growing export constraints, as Houthi attacks threaten the Red Sea and drone strikes near Egypt raise risks along its remaining corridor via the Suez Canal and SUMED pipeline.

Limited capacity through the SUMED pipeline and Suez Canal means Saudi crude exports could decline further unless Red Sea shipping becomes safer or the Houthi blockade is lifted. While higher oil prices have boosted Saudi revenues, the Kingdom's growing reliance on constrained and vulnerable export routes underscores the geopolitical risks facing global oil markets.

In early March, after Iran effectively paralyzed vessel traffic via the world's biggest oil chokepoint, every Gulf state that could redirect export flows did so. In the case of Saudi Arabia, it shifted its onshore Arab Light volumes from the Persian Gulf in the east onto the 7 million barrels per day Petroline to the port of Yanbu on its western shores.

This quickly pushed Yanbu's oil exports to about 2.47 million bpd, a massive 330% surge compared with pre-war levels. However, by June, Yanbu loadings had fallen to around 2.39 million barrels daily, down by 41% from the March peak and a 66% slump from the total Saudi export level from January of about 7.96 million barrels daily across both Gulf and Red Sea terminals.