Saudi Arabia may raise the price of the crude it ships to Asia via the Suez Canal, Reuters has reported, to reflect higher shipping costs due to the Houthi maritime blockade in the Red Sea. The price hike could reach $5 per barrel of crude.
Citing unnamed sources, the publication said Aramco was responding to the need to redirect oil flows from its Red Sea port of Yanbu to the Ain Sukhra port in Egypt, from where the crude gets transported via the Suez-Mediterranean pipeline to the port of Sidi Kerir, and from there, to Asian markets.
From Egypt’s Sidi Kerir, the crude gets loaded on tankers that ship it to Asia around Africa, which extends tankers’ journey to Asia considerably – and makes it more expensive. According to one of the Reuters sources, the rerouting could end up costing $10 million extra per cargo.
Traffic through the Bab el-Mandeb Strait in the Red Sea has materially slowed, and some vessel owners have their tankers move northward in the Red Sea toward the Suez Canal. The Suez-Africa route to Asia makes the journey about a month longer than if tankers travel through Bab el-Mandeb.
One Saudi tanker has already taken the longer route, per Bloomberg. The supertanker Olympic Luck, partially laden with Saudi crude at Yanbu on the Red Sea, transited the Suez Canal into the Mediterranean late on Sunday, according to shipping data, as reported by the publication earlier this week.
Other tankers are U-turning from Bab el-Mandeb, too, reflecting an increasingly complicated oil transport situation in the Middle East, with Hormuz remaining paralyzed and now the main alternative route for Saudi crude also getting choked.
Oil prices, however, are down again on reports that the U.S. and Iran have extended the pause in hostilities, raising hopes for peace negotiations.
By Irina Slav for Oilprice.com
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