Asian refiners look to Suez Canal to move Saudi oil amid Houthi shipping threats

• The Liberia-flagged vessel Rodos loaded at Yanbu and signaled Suez Canal transit to India's west coast, while South Korean refiner Hyundai Oilbank sought a VLCC with Suez Canal and SUMED pipeline options
• The longer route via Suez and around the Cape of Good Hope could add up to four weeks to transit times and raise freight and fuel costs substantially
• The disruption comes at a critical time as Saudi crude and products transiting Bab el-Mandeb reached a record high of over 4 million barrels per day last month

Summary

Asian refiners are rerouting Saudi crude oil shipments through the Suez Canal and around Africa following threats from Yemen's Iran-aligned Houthis to target Saudi Arabia. This marks a significant disruption to traditional oil shipping routes amid escalating U.S.-Israeli-Iran tensions.

Key Developments:

• The Liberia-flagged vessel *Rodos*, carrying Saudi crude from Yanbu port, is now heading west toward India via the Suez Canal rather than the typical eastern route through the Arabian Sea
• South Korean refiner Hyundai Oilbank is seeking a Very Large Crude Carrier (VLCC) with options to use the Suez Canal and Egypt's SUMED pipeline
• Two oil tankers carrying Saudi crude to Asia halted in the Red Sea on Tuesday following Houthi threats

Market Impact:

• The alternative route adds up to four weeks to transit time compared to standard eastward routes
• Freight and fuel costs will increase substantially due to the extended voyage around the Cape of Good Hope
• Saudi Arabia faces particular vulnerability as its crude and product shipments through the Bab el-Mandeb Strait reached a record 4 million barrels per day last month

Technical Details:

Fully loaded VLCCs cannot traverse the Suez Canal due to draft restrictions. Shippers must offload partial cargo to Egypt's SUMED pipeline before canal transit, then reload on the Mediterranean side—a process commonly used for European shipments.

According to Kpler's Matt Smith, the route changes indicate shippers are "taking the threats seriously," coming at a critical time for Saudi oil exports. The last Yanbu cargoes using the canal route were in April, destined for Europe.