Asian Refiners Weigh Suez Canal Detour to Avoid Red Sea Blockade Despite 4-Week Delay

As Yemen’s Iran-backed Houthi rebels threaten to blockade the Red Sea, Asian refiners are increasingly forced to explore alternative routes to bring in Saudi crude oil via the opposite direction of the Suez Canal.

According to Reuters on the 21st (local time), Asian refiners are reviewing plans to transport crude loaded at Saudi Arabia’s Red Sea port of Yanbu northward, pass through Egypt’s Suez Canal, and bring it to Asia by rounding Africa's Cape of Good Hope.

This is a long-distance detour running in the opposite direction of the traditional route, which heads south from Yanbu through the Red Sea and the Bab el-Mandeb Strait before entering the Arabian Sea.

With crude exports facing disruptions due to Iran's closure of the Strait of Hormuz, the Houthis have also threatened to block the Bab el-Mandeb Strait amid escalating military tensions with Saudi Arabia. This has burdened refiners with the challenge of securing alternative crude and finding new shipping routes.

South Korean refiner Hyundai Oilbank was also reported to have sought a Very Large Crude Carrier (VLCC) to load crude at Yanbu and head to South Korea.

Shipping industry sources said Hyundai Oilbank secured a vessel under conditions that include the option to use Egypt's Sumed pipeline, which connects the Suez Canal with the Red Sea and the Mediterranean.

Fully loaded VLCCs have difficulty passing directly through the Suez Canal due to draft restrictions, which refer to the depth of a ship's hull submerged in water.

Consequently, a method is utilized where a portion of the crude is unloaded on the Red Sea side, transferred to the Mediterranean via the Sumed pipeline, and reloaded onto the vessel after it passes through the Suez Canal with a reduced cargo load.

According to financial information provider LSEG and shipping data provider Kpler, the Liberian-flagged tanker Rhodes, which was heading from Yanbu to India's west coast, also turned its bow westward and set its destination as the Suez Canal.

Analysts estimate that choosing the detour route via the Suez Canal could extend travel time by up to four weeks.

With longer sailing distances, burdens on freight rates and fuel costs are also expected to rise.

Matt Smith, lead oil analyst at Kpler, explained that the shifting behavior of tankers means shipping companies are taking the Houthi threat seriously.

He added that as Saudi crude and petroleum product shipments passing through the Bab el-Mandeb Strait exceeded 4 million barrels per day last month to reach an all-time high, the Houthi disruptions have emerged at a particularly difficult time for Saudi Arabia.

(Photo: Getty Images Korea)
※ Please note: This article was translated by AI and may contain errors.