Saudi Arabia Runs Out of Easy Routes for Oil to Bypass Iran War

Saudi Arabia has made several quick pivots to keep its oil flowing since the start of the U.S. war with Iran.

Within weeks of Iran’s closure of the Strait of Hormuz — once Saudi Arabia’s primary export route for oil — the kingdom turned to Plan B: bypassing the strait by ramping up exports through pipelines to the Red Sea.

When the Iran-backed Houthi militia in Yemen announced a blockade in the Red Sea, Saudi Arabia used a new detour, sending ships north to a pipeline near the Suez Canal. This Mediterranean route is costlier and adds weeks to the voyage to Asia, where most of the country’s customers are.

Now Saudi Arabia, long the world’s biggest oil exporter, is facing yet another test of its ability to deliver its oil. Edging toward a full-blown war with the Houthis, Saudi officials said the kingdom would retaliate after the Houthis injured 73 civilians and hit energy facilities in the southern part of the country.

Whatever comfort shipping companies may have found using the Red Sea before the most recent escalation “has clearly soured,” said Peter Sand, a shipping analyst at Xeneta.

A steady supply of Saudi oil is critical to keeping global energy prices stable, and the country’s exports are already squeezed. Its oil exports fell last month to 3.2 million barrels a day, the lowest in at least 13 years, according to data from Kpler, a maritime information company. In the past week only two Saudi Arabian cargoes passed through the Bab al-Mandab Strait to the Red Sea, the group found.