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European Oil Markets
31JUL

Saudi crude abandons its Red Sea route

2 min read
09:33UTC

Saudi Arabia has loaded no crude through Bab el-Mandeb since the 23 July Houthi embargo, and 1.06 million barrels a day have poured into the Suez Canal instead.

EconomicDeveloping
Key takeaway

Saudi crude did not stop; it took the long way round through Suez at 106% higher canal traffic.

Saudi Arabia has loaded no crude for export through Bab el-Mandeb, the strait between Yemen and the Horn of Africa that links the Red Sea to the Gulf of Aden, since the Houthis declared an embargo on 23 July . The diverted volume has poured north into the Suez Canal, where crude traffic climbed 106% in a single week to 1.06 million barrels a day, on Kpler cargo tracking reported by AFP and carried on the AP and Reuters wires 1 2.

The Houthis are the armed movement that controls north-west Yemen and the eastern shore of the strait. Bab el-Mandeb is the southern gate for any Gulf cargo heading west toward Suez and the Mediterranean, so shutting it to Saudi loadings does not remove the barrels from the market; it reroutes them. Every cargo that once cleared the strait quickly now takes the long way round, and the arbitrage against Asian buyers resets with it.

To a spreads desk the position sits not in the flat price but in the physical shift. The reroute concentrates tonnage demand on the Yanbu-Suez leg, pulls crude north through a single contested corridor, and leaves the direction of Brent to swing on diplomatic headlines while the routing cost accrues on every barrel. Where that cost sits, and why the freight screens most desks read cannot see it, is the trade this week.

Deep Analysis

In plain English

Saudi Arabia normally ships crude oil out of Red Sea ports two ways: south through the Bab el-Mandeb strait near Yemen, or north through the Suez Canal towards Europe. When Yemen's Houthi rebels declared a blockade of the southern route on 23 July, tankers stopped using it completely, and traffic through Suez jumped 106% in a week to 1.06 million barrels a day. This matters because there is no easy third route; oil has to go one way or the other.

Deep Analysis
Root Causes

Saudi Red Sea crude has no third export corridor. Yanbu and Jeddah loadings must transit either Bab el-Mandeb south or the Suez/SUMED corridor north; a full Cape of Good Hope diversion adds roughly three weeks and was not attempted even during the 2024 Houthi campaign's worst weeks.

The binary nature of the route choice, rather than the Houthi threat itself, explains why the shift from partial bypass to total abandonment happened within days of the 23 July declaration instead of the gradual reallocation seen after the March peak documented by Wood Mackenzie.

What could happen next?
  • Consequence

    Suez Canal transit capacity, untested at this volume since March, becomes the binding constraint on Saudi Red Sea export flow rather than the Houthi blockade itself.

  • Risk

    A second chokepoint incident on the Suez/SUMED corridor would leave Saudi Red Sea crude with only the multi-week Cape of Good Hope diversion as a fallback.

First Reported In

Update #20 · Saudi crude reroutes to Suez, freight bites

The National· 27 Jul 2026
Read original
Different Perspectives
Sanctions compliance officer reviewing a Lukoil International GmbH bid
Sanctions compliance officer reviewing a Lukoil International GmbH bid
OFAC's amended FAQ 1224 gives a compliance desk its first published standard: full severance from Lukoil and a US-jurisdiction blocked account for sale proceeds. The conditions name neither ISAB nor Italy, so a Priolo Gargallo-linked bid answers a different question than a Neftochim Burgas or Petrotel Ploiesti one.
Managed-money funds on Brent Last Day
Managed-money funds on Brent Last Day
CFTC data for the week to 21 July showed managed money flipping 74,400 contracts to a net long of 15,665 against 1,410 short on the Brent Last Day contract, code 06765T. A fund that held that short through July has now covered it, and the spent short base raises the bar for the next leg higher.
Saudi crude exporters
Saudi crude exporters
Saudi-linked tanker transits through Bab el-Mandeb fell to about 7.5 a day after the 24 July underwriting withdrawal, pushing more barrels onto the longer route round the Cape or through the Yanbu terminal. Every diverted barrel ties up a ship for longer, and a fleet that turns slower charges more.
Tanker owners on the Bab el-Mandeb route
Tanker owners on the Bab el-Mandeb route
Lloyd's-market syndicates withdrew war-risk cover from Saudi-linked hulls on 24 July, leaving owners of that class of vessel to sail Bab el-Mandeb uninsured or not at all. Tanker transits on the route fell to roughly 7.5 a day, and cover, once withdrawn, does not return on a shipowner's timetable.
Eni
Eni
Eni's board approved second-quarter results on 29 July, swinging refining EBIT to a EUR0.08bn profit from a year-earlier loss even as group profit doubled, and named Red Sea freight cost as a cap on that improvement. A refiner absorbing higher shipping costs on Saudi-linked crude while its numbers improve treats the freight line as a drag, not a crisis.
Asian buyers (India, Japan, China, South Korea)
Asian buyers (India, Japan, China, South Korea)
Asian refiners are absorbing 62% of Yanbu's 3.75m b/d flow, the bulk of Saudi Arabia's rerouted crude now clearing east rather than into the Atlantic basin. That destination split leaves Asian buyers more exposed to any single Yanbu-specific disruption than under the kingdom's normal multi-terminal export pattern.