Saudi Oil Exports Under Pressure as Regional Tensions Escalate

Riyadh's oil exports are under pressure due to regional tensions in the Middle East. The ongoing U.S.-Iran conflict has disrupted shipping through the Strait of Hormuz, while growing hostilities between Saudi Arabia and Yemen's Houthi group threaten Riyadh's oil export routes through the Red Sea.

The International Energy Agency (IEA) reports that an average of about 20 million barrels per day of crude oil and petroleum products passed through the Strait of Hormuz in 2025, accounting for roughly one quarter of global seaborne oil trade. Since February's joint strikes by the U.S. and Israel against Iran, traffic through the strait has been severely restricted.

Saudi Arabia had begun exploring alternative export routes to mitigate the impact of disruptions in the Strait of Hormuz, including the East-West Pipeline, which transports oil to Yanbu Port on the Red Sea coast of western Saudi Arabia for shipment through the Red Sea. However, this route has also come under constraints due to intensified conflict between Saudi Arabia and Yemen's Houthi movement.

The Houthi group announced a maritime ban on Saudi vessels transiting the Bab al-Mandab Strait in July, followed by attacks on Saudi vessels passing through the strait. The Saudi Ministry of Energy reported that the East-West pipeline had come under multiple attacks in September, causing injuries and forcing its shutdown as a precaution.

The impact of these disruptions has already begun to spill over into physical oil trading. Global observed oil inventories fell by another 95 million barrels in August, with a cumulative decline of 507 million barrels since the end of February, equivalent to an average draw of roughly 2.8 million barrels per day.