Large oil tankers have avoided the strategic Bab al-Mandab Strait due to intensified military threats from the Houthis and attacks on Saudi Arabia's energy infrastructure. This situation has contributed to rising oil transportation rates, while other types of commercial vessels still show a greater willingness to endure the risks of crossing the Red Sea.
Increased Houthi Military Activities
In early September, Houthi forces moved towards the coastal city of Al-Mokha while claiming to have seized the island of Perim in this strategic waterway. These developments coincide with an attack on the east-west pipeline and an escalation of conflicts with Saudi Arabia.
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According to data from S&P Global Commodities at Sea, since September 9, no Very Large Crude Carrier (VLCC) has passed through the strait. In contrast, there were 24 crossings in August and 63 in July. These changes indicate increased risks for tankers associated with Saudi Arabia.
Impact on the Oil Transportation Market
Tanker managers emphasize that deviations from the Red Sea have been a key factor in the rising oil market. VLCCs are transporting more oil from the Mediterranean and the Atlantic to Asia, which has increased demand for transportation. According to Pankaj Khanna, CEO of Heidmar Maritime Holdings Corp, "Trades are changing, and we need to reposition our vessels to manage customer needs."
The global VLCC index for vessels without scrubber systems and without environmental technology reached $970,635 per day on September 16, marking a historical record. This figure has increased from $519,041 per day on September 1 and $283,635 per day on July 20.
Impact on Saudi Exports
Due to disruptions in Bab al-Mandab, Saudi Arabia is sending more crude oil to Asian consumers from the Yanbu field, either directly or through transshipment via the SUMED pipeline, which is loaded at the Sidi Kerir port in Egypt. These shipments, which require passing through the Cape of Good Hope route, add at least three weeks of travel time compared to Bab al-Mandab and accounted for 58% of Saudi Arabia's export flows to Asia in August.
Jack Kennedy, head of country risk in the Middle East and North Africa at S&P Global Market Intelligence, stated that the Houthis could "weaken the resilience of Saudi Arabia's Red Sea export route at a strategically important time." He noted that "short-term improvements will be more in monitoring and recording capabilities rather than an immediate change in attacks with unmanned vessels."
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