Saudi crude transits via Bab-el-Mandeb fall close to zero in August

Saudi Arabia's crude inventories have climbed to multi-year highs this month as exports remain squeezed by disruptions at both the Strait of Hormuz and the Bab-el-Mandeb. Rerouting via the Suez Canal is now in full swing, pushing Sidi Kerir departures to record levels. The alternative route around the Cape of Good Hope adds roughly 40 days to the round-trip voyage, driving freight costs substantially higher.

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Market & Trading calls:

• Further increases expected for Saudi crude exports to Egypt’s Ain Sukhna terminal as well as Saudi crude departures from Sidi Kerir to Asian destinations, a result of the country’s diversion strategy.
• Potential for more build-ups in Saudi crude inventories amid double whammy of Red Sea threats and continued Strait of Hormuz blockade.
• Expect Saudi crude exports to Europe to rise next month as Aramco lowered its official selling prices for European buyers in order to steer more sales that way.

Houthi threats in the Red Sea have caused Saudi crude transits through the Bab-el-Mandeb (BeM) strait to drop sharply since mid-July. Weekly transits averaged above 3.5 Mbd in early July — buoyed by higher Yanbu exports following the start of the US-Iran war — but have fallen close to zero so far in August (see chart). Meanwhile, Russian and Sudanese crude traffic via the BeM has remained quite stable, suggesting the disruption is specific to Saudi-linked trade.

Weekly transits via Bab-el-Mandeb of Saudi crude, Mbd

Source: Kpler

Meanwhile, Saudi Arabia has pursued its diversion strategy through the SUMED pipeline and the Suez Canal, redirecting Yanbu exports northward rather than southward to bypass Bab-el-Mandeb. Kpler data reflects this shift: Saudi crude transits via the Suez Canal have risen from zero in May-June to nearly 500 kbd by late July. Crude departures to Ain Sukhna, Egypt surged to the second-highest level on record in July at 1.32 Mbd — almost double June's 770 kbd. Correspondingly, departures from Egypt's Sidi Kerir terminal, the endpoint of the SUMED pipeline, jumped to a record 2.4 Mbd in the first week of August, up from a July average of 1.3 Mbd. Notably, some 700 kbd of this volume is now headed to Asia: Thailand, India, and the Philippines, a marked shift from the terminal's usual European destinations such as Poland, Italy, Lithuania, and Spain.

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