Red Sea oil supply disruptions have begun! Three tankers carrying Saudi Arabia crude oil that were bound for China and India reversed course in the Red Sea on Tuesday. They are now steering toward the Suez Canal instead of continuing along the Yemeni coastline near the entrance to the sea. The change in route followed a warning issued by Yemen’s Iran-aligned Houthi militia, according to a Reuters report.On Monday, the Houthis announced a naval blockade on Saudi Arabia, potentially opening another front in the US-Israeli conflict with Iran and increasing risks to global energy supplies and international trade beyond the Gulf region.In an email sent to shipping companies, the group warned them against loading or unloading cargo at Saudi ports, stating that vessels involved in such operations could be targeted “in any location”.Also Read | Another oil shock loading for India? How Red Sea route disruptions may hit not only Saudi, but also Russian crude supply
Saudi Arabia crude takes a U-Turn
The Houthis control northern Yemen, including the coastline along the Bab el-Mandeb Strait at the southern entrance to the Red Sea. With the Strait of Hormuz—which provides access to the Gulf—blocked during the conflict, Saudi Arabia’s Red Sea port of Yanbu has become the primary alternative export route for Middle Eastern crude, enabling the shipment of millions of barrels of oil each day.The vessels—Xin Long Yang, Rodos and Amazon—turning back point to a potential second disruption along a key global shipping corridor, adding to concerns over energy supplies already affected by the closure of the Strait of Hormuz.Shipping data showed that the Very Large Crude Carrier (VLCC) Xin Long Yang, which loaded 2 million barrels of Saudi crude at Yanbu on Monday, was initially sailing toward China via the southern exit of the Red Sea before reversing course and heading north toward the Suez Canal.The data also showed that Rodos, a smaller tanker carrying around 700,000 barrels of Saudi crude destined for India, changed course toward Suez on Tuesday. The Suezmax tanker Amazon, which loaded Saudi crude for India on Tuesday, also altered its route and headed toward the canal. All three vessels switched off their transponders on Tuesday.Dynacom Tankers Management, which manages Rodos and Amazon, and Cosco Shipping, the manager of Xin Long Yang, did not immediately respond to requests for comment.Another VLCC, New Prime, which had been due to reach Yanbu later this week to load crude, also turned back off the coast of Oman before entering the Red Sea. Its manager, Associated Maritime Co HK, did not immediately respond to a request for comment.
Rising risks
Insurance industry sources told Reuters that war-risk insurance premiums have already increased over the past 24 hours as underwriters reassess the risks associated with Saudi ports.“Vessels calling at Saudi Arabian ports are advised to reconsider transiting the Red Sea and to consider implementing enhanced mitigation measures,” British maritime security company Ambrey said, adding that it assessed vessels calling at Saudi Arabian ports “were at high risk”.Yanbu continues to load crude onto tankers that were already operating in the Red Sea or had entered through the Suez Canal, the Reuters report said.Vessel-tracking data indicated that the tanker Olympic Luck, which had transited the Suez Canal into the Red Sea, remained en route to Yanbu, along with several other nearby vessels. However, since Tuesday, most tankers either sailing through the Red Sea or loading at Yanbu have switched off their transponders.Routing vessels through the Suez Canal instead of allowing them to leave the Red Sea via the Bab el-Mandeb Strait would significantly lengthen voyages to Asian destinations, as ships would need to transit the Mediterranean before sailing around Africa.
Crucial energy bottlenecks at the centre of Middle East crisis
“While an actual blockade seems unlikely given the resources required for such an undertaking, a step-up in hostilities could see Houthis targeting Saudi-associated ships transiting the Bab el-Mandeb strait,” ship broker Clarksons said in a note on Tuesday.Clarksons noted that, in recent months, an average of 10 crude tankers had been passing through the Bab el-Mandeb each day.“However, should Houthis affect traffic through the region, we could see a reshuffling of crude cargoes in which Yanbu volumes are increasingly directed towards Europe.”Because fully loaded VLCCs cannot pass through the Suez Canal at full draft, they are required to offload part of their cargo, which can then be transported across Egypt via the SUMED pipeline before being reloaded in the Mediterranean.
