Since Iran’s Houthi allies declared a maritime embargo on Saudi Arabia, Saudi Arabia has ramped up oil exports through a pipeline that stretches across Egypt and into the Mediterranean Sea, as Riyadh seeks alternatives to the Red Sea.
Oil exports from Egypt’s Mediterranean port Sidi Kerir more than doubled to about 2.3 million barrels per day in August, compared to about 1 million barrels per day last month, according to data provided by trade information firm Kpler. Most of these exports are Saudi crude oil, said Matt Smith, director of commodity research at Kpler.
“This is not a short-term decision,” Smith said. “This is a clear change in strategy or dynamics.”
Sidi Keril is connected to the Red Sea port of Ain Sokhna by a pipeline called Sumed. The water is too deep for a fully loaded supertanker to pass through the Suez Canal. They pumped half of Saudi Arabia’s oil cargo into the Ain Sokhna pipeline, passed it through the canal and reloaded the oil at Sidi Keril, Smith said.
Middle East oil transport routes and pipelines
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Saudi Arabia is under pressure as Iran and its allies put pressure on key oil chokepoints in the Middle East. This year, after Iran cut off traffic in the Strait of Hormuz, Riyadh rerouted millions of barrels a day through a pipeline from the eastern region to the Red Sea port of Yanbu.
However, Houthi attacks on Saudi tankers in the Red Sea are now putting pressure on exports from Yanbu through the Bab el-Mandeb Strait.
“What’s going on here is a big mess,” Smith said. “It’s clear that Saudi Arabia is not taking this lightly, and we hope that this will become a new trend.”
Saudi Arabia’s exports through the Bab el-Mandeb strait from Yanbu fell by nearly 90% to 1.3 million barrels in the week ending Aug. 3, compared with 11 million barrels in the week of July 20, when the Houthis declared an embargo, according to Kpler data.
Tankers carrying Saudi oil in the Red Sea often sail without transponders to avoid Houthi attacks, making it difficult to accurately gauge the flow of oil. However, Saudi Aramco CEO Amin Nasser clarified earlier this month that Riyadh has an alternative strait to the southern Red Sea and Bab el-Mandeb.
“As you know, we have options through multiple access routes and alternative routes to the Mediterranean through the Sumed pipeline and the Suez Canal,” Nasser said during Aramco’s Aug. 4 earnings call.
But tankers have to make longer, more expensive journeys around Africa to reach customers in Asia, usually supplied by Saudi Arabia. Nasser said in a telephone conversation that the journey is about 25 days longer than exporting via Bab el-Mandeb.
Most of Sidi Keril’s oil exports go to the United States and Europe rather than Asia, Smith said. This appears to indicate that Asian customers are selling cargo because “it’s not cost-effective to go around Africa,” the analyst said.
“There’s a domino effect going on here,” Smith said. “Europe is getting more oil from Saudi Arabia, so it’s likely that West African crude going to Europe will end up going to Asia.”
But redirecting Saudi Arabia through Egypt will not completely eliminate the risk of attack. On July 30, two liquefied natural gas ships were attacked by drones in the Egyptian port of Damietta. No one has claimed responsibility for the attack.
