Saudi Arabia, which at the start of the Iran war redirected virtually all crude exports through its East-West pipeline to Yanbu on the Red Sea, has seen crude exports from Yanbu crumble by 41% to about 2.39 million barrels per day (bpd) by June, from a peak of 4.07 million bpd in March, Wood Mackenzie vessel tracking and cargo data showed.
Despite the near-total concentration of exports through Yanbu, volumes have declined steadily from the March peak, according to WoodMac’s tracking data. By June, Yanbu loadings had fallen to around 2.39 million bpd, down by 41% from the March peak and a 66% slump from the total Saudi export level from January of about 7.96 million bpd across both Gulf and Red Sea terminals.
“For months, the market treated Yanbu as the answer to Hormuz risk,” said Ian Solis, data analyst, Tech/Maritime-Ops for Wood Mackenzie.
“The problem is that Yanbu has its own chokepoint. If Bab al-Mandeb comes under sustained disruption from a declared Houthi naval blockade, Asia stands to lose a major crude supply artery,” the analyst noted.
This week, the Iran-aligned Houthis appeared to make good on their pledge to target Saudi Arabia’s oil exports from the Red Sea and the Bab el-Mandeb Strait.
The Red Sea oil chokepoint has been critical for Saudi crude oil shipments after the Kingdom has managed in recent months to redirect its exports that previously shipped from the Persian Gulf to Yanbu.
Yemen’s Houthis, allies of Iran, said late Wednesday they had struck two Saudi tankers in the Bab el-Mandeb chokepoint in the latest Middle East war escalation, saying the vessels had violated the naval blockade that the group declared earlier this week.
The Saudi diversification away from the Strait of Hormuz may now mean dependence on another chokepoint in a war zone.
“What looked like diversification was in reality a shift from one strategic bottleneck to another,” WoodMac’s Solis said.
By Charles Kennedy for Oilprice.com
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