Saudi Oil Rerouted Through Egypt Amid Strait Disruptions

Saudi Arabia is diverting its oil exports to Egypt's Suez Canal due to disruptions in the Hormuz and Bab el-Mandeb straits. The kingdom had previously used the Suez route for some of its oil exports, but not as a main export outlet for decades.

The majority of Saudi's oil buyers are now in Asia, making the Suez route necessary to reach them efficiently. However, taking the longer route via the Mediterranean and Gibraltar around Africa adds about a month to the journey, increasing fuel costs alone by $1.61 million to approximately $2.87 million.

The crossing of the Suez Canal adds an additional $1 million in fees. Big tankers will need to sail half empty through the Suez due to restrictions and top up in the Mediterranean. Saudi Arabia could partially unload tankers into the Sumed pipeline, a 320-km oil link bypassing the Suez.