Following the Houthi attacks on tankers in the Red Sea, at least two Asian crude oil buyers are reportedly in discussions with Saudi Aramco regarding potential changes to shipping routes that would involve detouring around Africa, according to informed traders.
The refiners are said to be evaluating alternative options to bypass the critical chokepoint at the southern end of the Red Sea, the Bab el-Mandeb Strait.
These alternatives could involve lifting crude from Egypt's Mediterranean port of Sidi Kerir instead of from Saudi Arabia's Red Sea hub at Yanbu.
Traders indicated that if Asian buyers wish to receive crude in the Mediterranean region, one potential solution would be for Saudi Aramco to first ship oil from Yanbu to Egypt's Red Sea port of Ain Sokhna, followed by northward transport via pipeline.
Another option under consideration would have the buyers themselves handle the logistics within Egypt after taking delivery at Yanbu.
Discussions are ongoing, the traders noted, and no final decisions have been reached yet.
Saudi Aramco declined to comment on the matter.
If the originally planned, shorter route to Asia via the Red Sea and Bab el-Mandeb Strait is diverted, it would require transit through Egypt and a subsequent detour around South Africa, significantly extending the voyage.
This rerouting could potentially add up to a month to shipping times, according to traders.
The Iran-backed Houthi rebels in Yemen have claimed responsibility for attacks on two tankers in the Red Sea, introducing fresh volatility into global oil markets.
The incidents have further heightened risks associated with energy transportation from the Middle East.
While millions of barrels of oil have been unable to transit the Strait of Hormuz due to U.S.-Iran tensions, the Red Sea route has served as a crucial alternative.
Traders are now reassessing the cascading impacts of the Red Sea attacks, with crude futures rising on Thursday.
Brent crude prices surpassed $98 per barrel, marking an increase of more than one-third for the month to date.
Saudi Aramco typically sells oil to customers west of the Suez Canal via Egypt.
Fully-loaded Very Large Crude Carriers (VLCCs) cannot pass through the Suez Canal, leading Saudi Arabia to prefer using smaller vessels or pipelines for such shipments.
At the time of reporting, West Texas Intermediate (WTI) crude was up 3.81% at $90.14 per barrel, while Brent crude was up 4.41% at $98.22 per barrel.
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