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Despite the Houthis’ claim that the strait is open except for vessels calling in Saudi Arabia, many tanker owners are likely to think twice before sending ships into the Red Sea.
Shifting Flow to the Red Sea
Over recent months, Saudi Arabia has responded to the Strait of Hormuz crisis by boosting crude oil flows through its East-West Pipeline to Yanbu on the Red Sea. Volumes have increased more than four-fold compared with the same period in 2025 and exceeded four million barrels a day in June and early July.
Until the latest Red Sea flare-up, about 2.5 million barrels per day was moving south through Bab el-Mandeb, according to statistics from New York broker, Poten & Partners. The exports via Yanbu were mostly destined for China, India, Japan and South Korea.
On 22 July a Saudi-flagged product tanker Encelia was struck in the Red Sea following a departure from Yanbu two days earlier, causing a fire on the vessel. At the weekend the Houthi claimed to have struck Aramco facilities in Jizan and Yanbu with missiles and drones. Aramco has not commented on the attacks but video showed a large column of smoke rising from the refinery in Jizan, while in Yanbu, two ballistic missiles aimed at oil installations were intercepted by a US-made Patriot battery operated in Saudi Arabia by the Greek military.
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Longer Routes for Asian Markets
According to Poten, the Bab el-Mandab situation is not clear. The broker reports that at least two Chinese controlled VLCCs carrying Saudi crude have passed through the strait without hindrance. Nevertheless, owners and charterers are carefully weighing up other options.
The broker reveals that rumours in the market suggest that Asian charterers may be fixing cargoes out of Sidi Kerir on Egypt’s Mediterranean coast. Since fully laden VLCCs cannot pass through the Suez Canal, their owners have two options. One is to use the 320km Sumed pipeline that links Ain Sukhna on the Red Sea with Sidi Kerir. VLCCs would discharge a part of their cargo in Ain Sukhna, proceed through Suez part-laden, and re-load oil at the Mediterranean terminal.
The second option is to use Suezmax tankers instead of VLCCs. However, VLCCs offer significant economies of scale on the long voyages to Asia, especially from the Mediterranean.
Poten estimates that shipping Middle East crude from Yanbu to South Korea, for example, via the Mediterranean increases voyage length from 24 days to 54. Although commercially possible, it would increase the landed cost of Saudi crude in Asia by a significant margin.
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The effect on the tanker market could be significant, Poten says. “Saudi crude will tilt towards Europe, Atlantic barrels will move east, Suezmax demand will rise, and the effective supply of tanker capacity will contract sharply,” the broker concludes.
The unusual geography of moving Yanbu crude to Asia without using the Bab el-Mandab means that even a modest diversion can generate an outsized increase in tonne-miles, boosting tanker rates.
However, the oil price was down around 4% on at the time of writing on 27 July after the US halted attacks on Iran. Brent crude was trade $93.07 per barrel down 3.83% and WTI crude at $85.50 a drop 4.27% according to oilprice.com.
