Saudi Arabia is considering raising crude oil prices for Asian buyers as shipping costs increase because of disruptions in the Red Sea. According to reports, the proposed increase could reach $5 per barrel.
The higher prices would apply to crude shipped through the Suez Canal after rerouting from Saudi Arabia’s Red Sea export terminal. The move reflects rising transportation costs caused by the Houthi maritime blockade.
Saudi Aramco has reportedly redirected crude shipments from the Yanbu port to Ain Sukhna in Egypt. From there, the oil travels through the Suez-Mediterranean pipeline to the Mediterranean port of Sidi Kerir.
Rerouting Raises Transport Costs
After reaching Sidi Kerir, tankers transport the crude to Asian markets by sailing around Africa. Consequently, the longer route significantly increases shipping time and operating expenses.
According to Reuters, the revised journey could add around $10 million in transport costs for each cargo. The alternative route also extends delivery times by nearly a month compared with the Bab el-Mandeb passage.
Shipping activity through the Bab el-Mandeb Strait has slowed considerably in recent weeks. As a result, many vessel operators have altered routes to avoid security risks in the region.
Reports also indicate that several tankers have turned away from the Bab el-Mandeb Strait. Meanwhile, some vessels have continued north through the Suez Canal before sailing around Africa.
Regional Tensions Continue to Affect Oil Trade
Bloomberg reported that the Saudi supertanker Olympic Luck recently followed the longer route after loading crude at Yanbu. The vessel transited the Suez Canal before continuing its journey towards Asian markets.
The disruption has complicated Middle East oil transportation as the Strait of Hormuz also remains affected. Therefore, exporters continue searching for alternative routes despite rising logistics costs.
Despite the shipping challenges, oil prices declined after reports that the United States and Iran had extended their pause in hostilities. Investors hope the diplomatic efforts could ease regional tensions and improve energy market stability.
