Saudi oil tankers face month-long detour, $2.5m extra cost to avoid Hormuz and Bab Al-Mandab

With Iran and Yemen’s Houthi militias disrupting two of Saudi Arabia’s main oil export routes — the Strait of Hormuz and Bab Al-Mandab — the Kingdom may be forced to export oil via Egypt’s Suez Canal.

Unlike the 1970s and 1980s, when Saudi Arabia’s main oil buyers were in Europe and the United States, most customers today are in Asia.

To reach Asia, Saudi oil tankers would need to sail around the entire African continent, extending the journey by about a month.

A tanker can travel from Saudi Arabia’s Yanbu port on the Red Sea to Taiwan via Bab Al-Mandab in just 19 days.

However, the route through the Suez Canal, Mediterranean Sea, Strait of Gibraltar, and around the Cape of Good Hope takes 48 days, according to shipping data from Kpler and the London Stock Exchange Group.

Reuters calculations using London Stock Exchange Group data show that this detour would increase fuel costs alone from $1.26 million to about $2.87 million.

Data from the London Stock Exchange Group also shows that transiting the Suez Canal incurs fees of $1 million.

According to Energy Aspects, large tankers would have to pass through the Suez Canal only half full due to restrictions, then reload in the Mediterranean.

To facilitate this, Saudi Arabia could offload part of the tankers’ cargo into the SUMED pipeline, a 320-kilometer oil pipeline bypassing the Suez Canal and connecting Ain Sokhna on the Red Sea to Sidi Kerir on the Mediterranean.

The pipeline can transport up to 2.5 million barrels per day out of Saudi Arabia’s total daily exports of seven million barrels.