Saudi Arabia reroutes crude to Suez as Houthi attacks and Middle East tensions push Brent above $100

Saudi Arabia reroutes crude exports from Red Sea to Suez Canal

Saudi Arabia has redirected all crude exports bound for Asia away from the Bab Al Mandeb strait and through the Suez Canal after Houthi rebels declared a maritime embargo on Saudi shipping. Suez-bound exports rose 106 percent for the week of the embargo announcement to 1.06 million barrels per day, up from the week starting July 13, according to Kpler data cited in reporting from July 26. The Houthis claimed strikes on Saudi Aramco facilities in Jizan and Yanbu on Saturday; neither the Saudi government nor Aramco has confirmed the claim. Yanbu's export terminal handled 92 percent of Saudi Arabia's seaborne crude exports in June, making it a critical supply-chain vulnerability. Aziz Alghashian, a senior non-resident fellow at the Gulf International Forum, described the situation as a "tit-for-tat" confrontation in which the Houthis are "choosing to escalate gradually rather than seeking a full-scale war."

Logistics and cost impact of the longer route

The Suez route adds roughly 30 days of transit time compared with the Bab Al Mandeb strait, significantly raising costs for Asian buyers. A Saudi cargo from Yanbu to South Korea takes about 24 days via Bab Al Mandeb versus 54 days via Suez and around the Cape of Good Hope. Only smaller Suezmax tankers can transit fully laden because the man-made canal is too shallow for fully loaded VLCCs, so it takes two Suezmaxes to move what one VLCC would carry through Bab Al Mandeb. Chartering two Suezmaxes for the Suez route costs about $2 million more than a single VLCC through the strait, according to industry analysis. Freight and insurance charges on Saudi crude to Asia, which averaged $4–$5 per barrel before the conflict, have climbed to $13–$15 per barrel.

Brent crude surges above $100 a barrel

Global benchmark Brent crude futures crossed $100 per barrel on July 23 amid concerns over Red Sea shipping disruptions, and settled at $96.78 a barrel on July 24, down 3.88 percent, remaining on track for a roughly 10 percent weekly gain. West Texas Intermediate futures finished at $89.31 a barrel on July 24, down 3.12 percent, on track for an 8.27 percent weekly rise. Prices eased after sources said China had initiated a push to resume stalled peace talks between the United States and Iran. JPMorgan analysts estimated that each additional month of supply disruption would add $7–$8 a barrel to Brent, lifting monthly averages to about $114 if disruptions extend to three months.

Russian supply risk and impact on Indian imports

India's crude oil imports in August face fresh risk from uncertainty over loadings from Russia's Black Sea port of Novorossiysk following Ukrainian attacks on the Sheskharis terminal, which accounts for nearly 20 percent of Russia's seaborne crude shipments. Russia's crude exports in July have already declined by around 400,000 barrels per day month-on-month, according to Kpler. Russia has been India's largest crude supplier over the past three years, accounting for as much as 50 percent of imports as refiners relied on discounted Urals crude after Western sanctions. Traders are reportedly not offering discounts for September loadings, which could push Indian refiners to pay more for Russian crude or replace those barrels with costlier cargoes from other suppliers.

Indian basket crude and downstream price pressures

The Indian basket of crude jumped 11 percent in a day to $103.33 per barrel on July 23, the highest in two months, driven by disruptions from the closure of the Strait of Hormuz and Houthi attacks in the Red Sea. International free-on-board prices of petrol and diesel have surged, raising the possibility of under-recoveries for Indian oil marketing companies if retail prices remain unchanged. India imports nearly 90 percent of its crude requirement, tying retail prices to international movements, with the rupee remaining weak against the US dollar.

South Korea turns to Venezuelan crude

GS Caltex imported 110,000 barrels of Venezuelan oil last month, worth about $12.015 million at an average of roughly $109.23 per barrel, marking South Korea's first Venezuelan crude imports in nearly two decades. Imports from Venezuela ceased after 2006 following resource-nationalism policies under former President Hugo Chávez and subsequent US sanctions on the Maduro regime. SK Energy and HD Hyundai Oilbank are also evaluating the economic feasibility and refining potential of Venezuelan Merey 16, a heavy sour crude with lower API gravity than Middle Eastern Dubai crude. A GS Caltex official said the cargo was brought in for testing purposes to assess whether it can secure stable refining margins.