Saudi Oil Finds New Route Bypassing Strait of Hormuz

The Strait of Hormuz is not the only route for Saudi oil to reach global markets. A lesser-known pipeline, built across Saudi Arabia over 40 years ago, can still transport some of its oil. This East-West conduit allows the kingdom to bypass the strait and keep some of its oil flowing.

However, with the Houthis threatening to close the Bab el-Mandeb strait on the southern end of the Red Sea, Saudi Arabia needs a new workaround. The pipeline, which was once a lifesaver for the global economy during the Iran war, may become a lifeline again.

The Saudis can push their oil northwards and take the Suez Canal to reach the Mediterranean Sea. But this route is only feasible for medium-sized oil tankers, not the largest ones, known as Very Large Crude Carriers (VLCCs), which are the workhorse of the oil industry.

VLCCs can carry two million barrels, but they cannot sail through the canal fully laden due to its shallow waters. To overcome this issue, Saudi Arabia can use the Suez-Mediterranean pipeline (Sumed) or the Eilat-to-Ashkelon pipeline, which links the Red Sea with the Mediterranean.

While these pipelines have a capacity of about 2.5 million barrels per day and 1.2 million barrels per day, respectively, they cannot fully replace the current flow from Yanbu. The Saudi plan is to use tankers to shuttle crude from its oil port in the Red Sea to the Sumed pipeline and then offload part of their cargo before navigating through the Suez Canal.

This maneuver will be costly and logistically complex, leading to higher freight costs and longer shipping times. For example, oil tankers heading to Asia would emerge in the eastern Mediterranean instead of near the Indian Ocean, adding 25 days to their trip from Saudi Arabia to Japan.