The Red Sea Is Becoming Saudi Arabia's Biggest Oil Bottleneck
Russia's Biggest Black Sea Oil Port Goes Quiet as Drone Threat Grows Cyril Widdershoven is a senior maritime, energy, and geopolitical analyst and Senior Advisor at Blue Water Strategy, specialising in the strategic intersection of shipping, ports,… For years, Saudi Arabia's strategic answer to any disruption in the Strait of Hormuz has been remarkably straightforward.
If volumes via the Persian Gulf were threatened, the answer was to pump west through the East-West Pipeline to Yanbu on the Red Sea.
Markets have always seen this as reassuring, while strengthening Saudi energy security and reducing dependence on Hormuz.
Current developments in the Red Sea, especiallyBab El Mandab, however, have exposed a critical weakness in that assumption.
The East-West Pipeline is not solving the total problem, as once crude reaches Yanbu, it still has to leave the Red Sea.
The Bab El Mandab is now, however, inaccessible due to a sustained Houthi blockade.
The Kingdom now faces a logistical challenge with significant geopolitical implications, as a closure could disruptglobal oil marketsand shift strategic power balances.
There is, of course, still the simple proposition that tankers could instead sail north through the Suez Canal.
Yes, at first glance an elegant option, as the Suez Canal continues to operate, and Egypt also controls the SUMED pipeline.
First of all, the Suez route was never designed to replace unrestricted access through Bab el-Mandab for several million barrels per day of Saudi crude, refined products, and petrochemical exports.
Yes, it can absorb additional traffic, but not without creating new bottlenecks, longer transit times and significantly higher costs for global energy markets.Related: ADNOC Issues Seventh Crude Tender Since June Despite Hormuz, Red Sea Risks With Saudi Arabia's East-West Pipeline’s nameplate capacity of around seven million barrels per day, crude will reach Yanbu on the Red Sea.
Even though a substantial part of this volume feeds domestic refineries and petrochemical facilities in western Saudi Arabia, the rest will need to be exported.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
Comments
Post a Comment