DUBAI -- Saudi Arabia's vast oil exports increasingly depend on one last narrow exit.
Since the Iran war began, the kingdom has ramped up exports across the country to its Red Sea coast, bypassing the Strait of Hormuz, and shipped them through the Bab al-Mandeb Strait to Asian customers. Now, threats from Houthi militants -- and several attacks against Saudi vessels in recent days -- risk choking off that workaround, forcing more Saudi barrels onto a longer, costlier and technically challenging journey through Egypt's Suez Canal and around Africa.
This week, at least four tankers carrying Saudi crude abruptly reversed course before reaching Bab al-Mandeb at the southern end of the Red Sea to head north toward Suez, while Saudi Arabia has begun offering more crude cargoes for loading from Egypt's Mediterranean ports, according to ship-tracking firm Vortexa. In the first three weeks of July, seaborne oil transit via the Suez Canal ran at its highest volume in 2 1/2 years, while imports to the Sumed pipeline -- which runs parallel to the canal -- were up 50% from the previous month, Vortexa data showed.
The diversions mark the latest redrawing of global oil flows after months of war have forced producers, traders and shipowners to abandon familiar routes for ever costlier detours. Gulf producers from the United Arab Emirates to Kuwait have been racing to build routes bypassing the Strait of Hormuz. On Saturday, Iraq said it would sign an agreement with Syria to build a pipeline project to carry Iraqi oil to the Mediterranean Sea.
The stakes for the global economy are high: Persistent risks to regional shipping could push oil well above $100 a barrel, analysts say, stoking inflation and straining an already fragile global economy.
Nor is the Suez route beyond the conflict's reach. In recent days, senior officials from the Islamic Revolutionary Guard Corps have warned that if Washington intensifies its attacks or considers a ground invasion, Iran could seek to shut Bab al-Mandeb and the Red Sea, including targeting vessels, according to people familiar with the matter. Saudi and Egyptian efforts have so far failed to persuade the Houthis, an Iran-backed faction in Yemen, to step back.
"The Saudis can get oil out of the Red Sea, but the issue is that this is a much longer and more expensive route to get to markets in Asia," said Gregory Brew, senior analyst for Iran and energy at Eurasia Group. "For the oil market this means more pressure on prices."
Saudi media said Friday that a Saudi vessel was struck in the Red Sea. Saudi military officials said they carried out military strikes on Houthi targets in the area of the port city of Hodeidah in response. Earlier in the week, a tanker off southern Saudi Arabia caught fire after being struck by an unknown projectile, as the Houthis claimed attacks on two Saudi-flagged vessels using missiles and drones.
On Thursday, President Trump warned that if the Houthis strike additional vessels, both their forces and Iran's will face "major military punishment." The U.S. military said late Thursday it had carried out its 13th consecutive night of strikes on Iran, hitting military command centers, drone-storage facilities and maritime capabilities.
The new Red Sea threat compounds a double hit of disruption to global energy markets: Flows through Hormuz have slowed to a trickle, while Ukraine has intensified attacks on Russian oil infrastructure. After months of war eroded the market's inventory buffers, crude prices have risen sharply to reflect the risk of further losses. On Friday, Brent futures were trading around $97 a barrel, after jumping above $100 a barrel on Thursday.
Brew said continued fighting could keep oil near $100. Goldman Sachs analysts said in a report this week that prices could climb to $120.
Helima Croft, head of global commodity strategy at RBC Capital Markets, said sustained Houthi attacks could materially reduce Red Sea oil flows and "shift the sentiment of 'the market always finds a workaround' camp."
The Houthi threat jeopardizes the relief valve that has kept one of the world's biggest oil exporters connected to its customers and helped prevent global prices from surging even higher during the Iran war.
Since the conflict erupted, Saudi Arabia has used its East-West Pipeline to lift shipments from Red Sea terminals to around 4.9 million barrels of oil a day from roughly 700,000 to 1 million barrels a day, according to Richard Bronze, head of geopolitics at London-based consulting firm Energy Aspects. That is the equivalent of roughly 5% of global supply. Of that volume, roughly 3.5 million barrels a day have been sailing through the Bab al-Mandeb, mostly to buyers in Asia.
If that southern passage becomes too dangerous, the remaining escape route runs north through Egypt. But Suez is an outlet, not a full substitute. It can keep Saudi oil moving only by routing ships through Egyptian terminals and a canal too shallow for some heavily laden vessels, before sending Asia-bound barrels westward across the Mediterranean, past Gibraltar and around the Cape of Good Hope. The extra distance raises freight and insurance costs, ties up ships and can delay deliveries by weeks.
A so-called Suezmax tanker, designed around the canal's restrictions, can carry roughly 1 million barrels through it. A very large crude carrier, or VLCC, can hold about 2 million barrels but sits too deep in the water when fully loaded to use the canal.
To pass, a VLCC can discharge roughly half its cargo on the Gulf of Suez. That oil is then pumped about 200 miles across Egypt through the Sumed pipeline, which runs parallel to Suez, to the Mediterranean. The lightened tanker transits the canal and can collect the oil on the other side, or another ship can load it. Alternatively, shippers can split the cargo between two Suezmax tankers.
For Asia-bound cargoes that do go north, the map then becomes more punishing. The detour to Asia can add a delay of some 20-30 days, Bronze said. With ships being tied up for weeks, longer voyages also push up freight and war-risk insurance rates.
Product tankers carrying diesel and jet fuel depend more heavily on Suez than the VLCCs that dominate long-haul crude trades, according to Standard Chartered, making fuel markets particularly vulnerable. That risk comes as fuel prices are already elevated following Ukrainian attacks on Russian refineries.
The northern outlet itself was born from an earlier crisis. The Suez Canal opened in 1869 but was closed from 1967 to 1975 following the Arab-Israeli war. The shutdown accelerated plans for the Sumed pipeline, which began operating in 1977 as an overland link carrying oil between the Red Sea and the Mediterranean.
The latest disruption exposes the limits of bypassing the Middle East's chokepoints. Geography may offer an alternative route, but regional alliances can put that route at risk, too.
"If Iran can coordinate with the Houthis and strategically close or open both the Strait of Hormuz and the Bab al-Mandeb to put pressure on the United States and the other Gulf states, it is a much more potent lever they have at their disposal," said Edward Fishman, director of the Center for Geoeconomic Studies at the Council on Foreign Relations.
Write to Georgi Kantchev at georgi.kantchev@wsj.com and Summer Said at summer.said@wsj.com
(END) Dow Jones Newswires
July 26, 2026 04:13 ET (08:13 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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