Saudi Arabia has significantly increased its oil exports via a pipeline that connects to Egypt’s Mediterranean coast. This strategic adjustment is a response to a maritime embargo declared by Iran’s Houthi allies, who are tightening their grip over key shipping routes in the region.
Rising Exports from Sidi Kerir
According to data from Kpler, oil shipments from Egypt’s Mediterranean port of Sidi Kerir soared to approximately 2.3 million barrels per day in August. This figure represents a sharp increase from the 1 million barrels per day recorded in the previous month. The bulk of these exports consists of Saudi crude, indicating a notable shift in Riyadh’s export strategy. Commodity research director Matt Smith commented, “This isn’t a temporary measure. It signifies a substantial change in approach or market dynamics.”
The Sumed pipeline plays a crucial role in this logistical shift. It links Sidi Kerir with the Red Sea port of Ain Sokhna. Due to the massive size of supertankers, which cannot fully navigate the Suez Canal when loaded, they offload part of their cargo at Ain Sokhna. They then travel through the canal, reloading the remaining oil at Sidi Kerir. This system not only facilitates the flow of Saudi oil but also demonstrates the technical challenges posed by the shipping routes in the region.
Impact of Regional Tensions
The geopolitical landscape is further complicated by Iran and its allies exerting pressure on vital oil chokepoints. Saudi Arabia has shifted millions of barrels through an east-to-west pipeline toward its Red Sea port of Yanbu, especially as Iran has restricted traffic in the Strait of Hormuz. However, recent Houthi attacks on Saudi tankers in the Red Sea are threatening exports from Yanbu, particularly through the Bab el-Mandeb Strait. Smith comments on the situation, indicating a “significant dislocation” and emphasizing that the Saudis are not ignoring these mounting challenges.
From early August, Saudi exports through Yanbu decreased nearly 90%, dropping to 1.3 million barrels compared to 11 million barrels in late July when the Houthi embargo commenced. This drastic reduction indicates the escalating risk associated with shipping in the region.
Alternative Routes and Future Outlook
In light of these challenges, Saudi Aramco’s CEO, Amin Nasser, highlighted the available alternatives, stating that Riyadh can rely on multiple access routes, including the Sumed pipeline and the Suez Canal. Yet these alternatives come at a cost; tankers might need to navigate a lengthy route around Africa, extending their journey by about 25 days compared to the more direct route through the Bab el-Mandeb Strait.
Interestingly, much of the crude oil exported from Sidi Kerir is now heading to the U.S. and Europe rather than Asia. This shift could reflect a broader trend, whereby Asian customers are opting out of costly transport routes. Smith describes this situation as a “domino effect,” suggesting that an increase in crude shipments from Saudi Arabia to Europe might result in West African oil destined for Europe now being redirected to Asia.
Nevertheless, the rerouting of Saudi oil through Egypt does not entirely eliminate the risk of attacks. Recent drone strikes against liquefied natural gas ships at Egypt’s Port of Damietta serve as a stark reminder that threats in the region persist. As these dynamics evolve, the Saudi oil export strategy continues to adapt under the weight of increasing geopolitical pressures, indicating that market stability remains uncertain in this pivotal region.