MW Saudi Arabia has a workaround for the Hormuz crude-export standstill. It may not be enough.
By Claudia Assis
Oil exports leaving from an alternative to Hormuz are inching toward 3 million barrels a day - but that's less than half of Saudi exports before the war
A map and insert showing the location of the Yanbu port and energy facilities on the west coast of Saudi Arabia. The image highlights the increase in the number of empty vessels waiting to be filled, as the area has become key for the kingdom's crude exports. Red arrows represent empty tankers.
Saudi Arabia's efforts to sidestep the standstill at the Strait of Hormuz appear to be bearing fruit. A cluster of ships are waiting to load Saudi crude oil from a Red Sea port on the kingdom's west coast, just as the conflict in the Middle East has entered a darker phase with more strikes on vital energy infrastructure.
The port and facilities at Yanbu are at the end of Saudi Arabia's East-West pipeline, which roughly stretches the width of the kingdom over about 750 miles - or about the driving distance between New York City and Indianapolis.
Exports from the Yanbu port and terminals are edging toward 3 million barrels a day in March, data from energy consultancy Kpler show. The kingdom exported in total about 7 million barrels of crude and crude products per day before the war.
Investors have cheered the extra supply from Saudi Arabia, but are under no illusions that it's enough to knock down crude-oil futures prices, which were looking at gains of 46% for the week. New York-traded crude futures (CL00) are hovering too close to $100 a barrel for comfort, and London-traded Brent crude futures (BRN00) are already past that threshold. That's translated into higher gas and energy prices for consumers and businesses around the world.
"Anything obviously would help oil prices," said Rob Thummel, a portfolio manager with Tortoise Capital. "But it's going to take some opening of the Strait of Hormuz to see material moves lower for crude prices. It helps but it doesn't solve the problem."
The U.S. and its allies have intensified the battle to reopen the passage, the Wall Street Journal reported Friday.
Source: Kpler
Yanbu, on the Red Sea, typically exports 750,000 barrels a day of crude oil, said Matt Smith, an oil analyst with Kpler. "It is up to 2.5 million barrels per day so far this month and, based on vessels heading there, should climb materially higher than that," he said.
Roughly 40 oil tankers are waiting at Yanbu to be filled, according to Kpler. "There is never this many empty tankers there. Saudi Aramco has basically rerouted its [very large crude carriers] that head to the Mideast Gulf to head to the Red Sea instead," Smith said. Such VLCCs can carry about 2 million barrels of crude oil.
Yanbu and the East-West pipeline are one of the few land-based options for Middle East crude exports - and for Saudi Arabia, the only one. It's not without risks: Loadings at the complex were halted on Thursday after nonspecified aerial attacks near the area, according to reports.
The conflict has widened in recent days and attacks to energy facilities have escalated - including a fresh volley of Iranian missiles on Thursday aimed at the world's largest liquefied-natural-gas plant in Qatar, which already had suffered "extensive damage" from a previous strike.
It's not the first time that the Saudis have looked to Yanbu to mitigate the impact of geopolitical conflicts elsewhere.
In early 2024, Saudi Aramco began exporting Arabian Heavy, one of its five crude grades, from Yanbu - rather than the usual route through Saudi Arabia's Gulf Coast - to get around threats of Houthi attacks on cargo vessels going through the Bab el-Mandeb strait at the southern entrance of the Red Sea, according to the U.S. Energy Information Administration. In late 2023 and early 2024, Iran-backed Houthi rebels in Yemen hijacked a commercial ship in the Red Sea and launched attacks on dozens of other vessels.
Earlier this month, Saudi Arabia said it would expand the East-West pipeline's capacity to its maximum 7 million barrels a day, with about 2 million going to domestic consumption.
Besides the East-West pipeline and the facilities at Saudi Arabia's Yanbu, the United Arab Emirates has the Habshan-Fujairah pipeline, with much less capacity at about 1.8 millions of barrels per day, or only about a third of its production.
"If both alternative export corridors are simultaneously suppressed - Fujairah through direct Iranian strikes, and Yanbu through Houthi interdiction at Bab al-Mandeb - the region's remaining export capacity would collapse entirely," analysts at Rystad Energy said in a note.
Iraq has land options through the north to Turkey, but also at a much smaller scale. Iraq's northern route had been halted until this week, when Iraq and the semiautonomous region of Kurdistan reached an agreement to resume the exports through Turkey. Kuwait, Bahrain, Qatar and Iran are fully dependent on the Hormuz passage.
Hundreds of oil tankers remain trapped at the Strait of Hormuz, as Iran decides which ones can pass and reportedly has worked out deals with some Asian countries for the safe passage of a few ships a day. The strait has been essentially closed to through traffic since early March.
The U.S. and allied countries on Friday were sending attack jets over the sea lanes to hit Iranian naval ships, and Apache helicopters to shoot down Iran's drones, in an effort to reduce danger from Iran's weapons and to open up the possibility of military escorts for vessels in and out of the Persian Gulf, the Wall Street Journal reported.
But that would likely take weeks, and also raises the possibility that Iran will intensify counterattacks and hit the vulnerable on-land options for Saudi Arabia and other Middle Eastern countries.
Before the war, some energy experts worried about a oil supply glut this year. Estimates of cuts to Middle East crude production so far during the conflict vary. Standard Chartered energy analyst Emily Ashford told MarketWatch on Friday that production cuts are likely topping 10 million barrels of oil a day currently, from last week's estimates of cuts somewhere between 7.4 million barrels a day and 8.2 million barrels a day.
Flows through the Strait of Hormuz have declined to about 1.8 million barrels a day, according to J.P. Morgan. In times of peace, some 20 million barrels of crude and crude products, or about a fifth of the world's production, cross the narrow sea passage.
Americans are seeing higher prices at gasoline pumps as a result, while the standstill at Hormuz has affected container shipping as well, with shipping companies opting for longer, costlier routes to avoid danger. They're also facing higher costs for fuel to power their vessels' engines. Such costs could eventually be passed down to consumers, even as the U.S. is a net exporter of crude.
Ripple effects are also being felt by the fertilizer business, with disruptions and higher costs that may eventually show up in food prices. Companies across the board, beyond the shipping companies themselves, have instituted fuel surcharges. Concerns have also emerged about supplies of helium, used in the manufacture of semiconductors.
In some Asian countries that are more dependent on Middle East oil, energy shocks and energy demand curbs are already part of daily life.
"Governments are responding with a mix of demand management and emergency measures," analysts at J.P. Morgan said in a separate note earlier this week.
"Bangladesh brought forward the Eid-al-Fitr holiday and allowed universities to close early to save fuel. The Philippines and Sri Lanka instituted four-day workweeks to curb diesel use and stretch dwindling stocks. Pakistan closed schools and shifted universities online. Officials in Thailand and Vietnam have been urged to use stairs, work from home and limit travel, while Myanmar introduced alternating driving days to reduce road fuel demand," they wrote.
-Claudia Assis
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March 20, 2026 15:03 ET (19:03 GMT)
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