Saudi Oil Reroutes Hit Capacity Limits in Egypt

Saudi Arabia has been rerouting its oil exports due to the ongoing conflict in the Middle East, but it's running out of options. In early March, Saudi shifted its onshore Arab Light volumes from the Persian Gulf to Yanbu on its western shores after Iran shut down the Strait of Hormuz.

The Petroline route saw a massive 330% surge in oil exports, reaching 2.47 million barrels per day in March. However, by June, loadings had fallen to around 2.39 million barrels daily, down by 41% from the peak and a 66% slump from January's total export level.

The decline was partly due to the temporary Hormuz traffic resumption in late June, but it fell through, and missile strikes resumed. Now, Saudi is rerouting its oil flows to Egypt via the Suez Canal and the SUMED pipeline, which has a capacity of 2.5 million barrels daily.

The country can theoretically keep sending oil north via Suez, but practically, it would be hard for Saudi to do that at a scale comparable to previous oil export routes. Other countries have reserved some of the SUMED capacity, and the Suez Canal can only handle about 1 million barrels daily.