Saudi Workaround for Exporting Oil from Red Sea

 CNBC published on 12 August 2026 an article titled "Saudi Arabia Ramps Up Oil Exports Through Mediterranean Pipeline to Avoid Attacks in Red Sea" by Spencer Kimball and Deena Zaidi.

Following the Iranian-supported Houthi blockade of Saudi ships passing through the south end of the Red Sea, Riyadh is rerouting oil supertankers north through the Suez Canal even for oil destined for Asia.

The problem is that fully loaded supertankers sit too deep in the water to transit the Suez Canal.  Consequently, they pump half the Saudi oil cargo into a pipeline on Egypt's Red Sea coast that conveys it across Egypt to an outlet in the Mediterranean Sea.  The supertankers then transit the Suez Canal half loaded and reload the oil at the other end of the pipeline in the Mediterranean.  Saudi oil exports departing the south end of the Red Sea are down 90 percent.

Because of the Houthi blockade, a higher percentage of Saudi oil is now going north to Europe rather than south to Asia.  This may result in a boon for West African oil by making transport to Asia more competitive than oil originating in Saudi Arabia. 

Background of Houthis' Red Sea Blockade

 Pakistan's South Asian Chronicle published on 1 August 2026 an article titled "Houthi Red Sea Crisis."

This is a nice summary of the background of the Houthi blockade of the Red Sea and relations with Saudi Arabia.  

Houthi Red Sea Attacks Cause Higher Insurance Rates

 Insurance Journal posted on 30 July 2026 an article titled "Houthis' Red Sea Attacks Prompt London Insurers to Widen High-Risk Zone" by Jonathan Saul.

As a result of Iran-backed Houthi attacks on international shipping in the Red Sea, London insurers have expanded the area in the Red Sea subject to higher rates.  Even small changes to war insurance add hundreds of thousands of dollars in extra costs for a seven-day voyage.  

China Has Arranged Red Sea Safe Passage with Houthis

 Al-Monitor published on 29 July 2026 an article titled "China in Touch with Yemen's Houthis to Allow Ships to Sail Through Red Sea, Sources Say" by Jonathan Saul, Parisa Hafezi, Timour Azhari, and Chen Aizhu.  

Beijing has asked the Iranian-backed Houthi rebels in Yemen to promise safe passage for its oil tankers transporting crude from Saudi Arabia's Yanbu terminal in the Red Sea south through the Bab el-Mandeb choke point.  China clears each shipment with the Houthis, who have developed good relations with Beijing.

Impact of Houthi Blockade in Red Sea

 AEIs Critical Threats posted on 23 July 2026 an analysis titled "Houthi Blockade in the Red Sea" by Michael DeAngelo, Liam Karr, and Alexsandar Wiebler.

The Iranian-backed Houthi blockade of the south end of the Red Sea has already disrupted shipping in the Red Sea, causing increased costs and transit delays.  The Houthi blockade will further increase fuel shortages, negatively impact African countries that rely on Saudi fuel shipments, and strain the global economy.  

Yemen's Houthis Reportedly Ready to Attack Shipping in Southern Red Sea

 CNBC posted on 22 July 2026 an article titled "Houthis Deploy Missiles and Drones to Attack Ships in Southern Red Sea, Naval Group Says" by Spencer Kimball.

Iran-backed Houthi rebels in Yemen have completed preparations to attack shipping, including the deployment of missiles and drones positioned near the Bab el-Mandeb choke point at the south end of the Red Sea. 

The European Union's naval mission in the Middle East warned commercial ships linked to Saudi Arabia, Israel, and the United States to avoid transiting the Red Sea or Gulf of Aden.

Oil Tankers Avoiding South End of Red Sea Following Houthi Threats

 The Indian Express published on 22 July 2026 an article titled "India-bound Oil Tanker Takes U-turn in Red Sea after Houthi Threat."

Two oil tankers headed south for India and one for China toward the Bab el-Mandeb choke point from the Saudi oil terminal of Yanbu in the Red Sea turned around and headed north through the Suez Canal following threats from the Iran-backed Houthis in Yemen.

The tankers must now transit the Mediterranean Sea, sail around Africa, and pass the Cape of Good Hope before reaching India or China, adding significantly to shipping costs.  These are the first Saudi oil laden tankers to respond to the Houthi threat. 

Another oil tanker scheduled to load Saudi crude at Yanbu by entering the Red Sea through the Bab el-Mandeb choke point turned back off the coast of Oman.     

Iran War Moves to Houthis and Red Sea

 Al-Monitor published on 20 July 2026 an article titled "As Houthis Declare Red Sea Blockade on Saudi Arabia, Oil Markets Brace for Impact" by Jack Dutton.  

Yemen's Iran-backed Houthi rebels said on 20 July that it was imposing a naval blockade on Saudi Arabia, as the regional war widens to threaten another key route for global oil supplies following disruption in the Strait of Hormuz.  Because of the problems in the Strait of Hormuz, Saudi Arabia has redirected much of its crude exports by pipeline through its Red Sea terminal at Yanbu.  

Ships sailing north of Yanbu for Europe through the Suez Canal will not be impacted by this Houthi action.  Those headed south for Asia through the Bab el-Mandeb choke point will be impacted and the Saudis may put at risk a large percentage of current crude exports.  If the Houthis successfully prevent the Saudis from passing through Bab el-Mandeb, global supplies could fall by as much as 7 percent.  

Will US Blockade of Hormuz Stir Houthi Response in Red Sea?

 The Independent published on 14 April 2026 an article titled "What Is the 'Gate of Tears'? Key Shipping Route that Could Be Attacked by Houthis and Disrupt Global Economy" by Bryony Gooch and Harry Cockburn.

The authors speculate on the possibility of Yemen's Iran-backed Houthis attacking international shipping in the Red Sea following a US blockade of the Strait of Hormuz between Iran and Oman.

The Iran War Reshapes the Red Sea Region

 The International Crisis Group posted on 2 April 2026 a 36-minute podcast titled "How the Iran War Is Reshaping the Region" with Alan Boswell and Hafsa Halawa, independent political analyst.

The war in Iran is already resulting in shortages of fuel, energy, and electricity in the Red Sea region.  Over the longer term, it will likely cause higher inflation and food shortages due to diminished access to imported food and fertilizer, 40 percent of which passes through the Strait of Hormuz.  The fertilizer issue is exacerbated because it does not have a long shelf life.

Large diasporas in the Gulf states from countries like Ethiopia may start returning home as jobs shut down.  Gulf state investment in the Horn of Africa, which had been growing rapidly, is likely to fall significantly.  

The war may force Gulf states to refocus their national security strategies as they assess freedom of navigation and support for factions or governments in Sudan, Ethiopia, and Eritrea.  Saudi support for the Sudan Armed Forces (SAF) may decline because of Iran's ties with the SAF. The UAE is likely to continue its support for Ethiopia.

The war is likely to exacerbate existing tension between Saudi Arabia and the UAE.  Egypt and Turkey will need to reassess their strategies in the region.  The war comes on top of Israel's recognition of Somaliland, which already exacerbated Gulf state security relationships.  

Saudi Arabia has shifted oil exports to the port of Yanbu in the Red Sea.  If the Houthis decide to attack international shipping in the Red Sea, this could end the shipment of oil to Asia by closing the Bab el-Mandeb choke point.  It would still be possible to ship oil from Yanbu north through the Suez Canal to Europe.  

The Iran war makes clear that the regional security situation is now completely interconnected.  

The Houthis Cautious Support for Iran

 AEI's Critical Threats published on 3 April 2026 an analysis titled "Houthi Escalation Calculus Following Cautious Entry into the Iran War" by Liam Karr and Brian Carter.

The Iran-backed Houthis threatened to join Iran's campaign with attacks across the region designed to coerce the United States and Israel to make concessions in negotiations with Iran and to deter further military escalation against Iran.  But the Houthis are unlikely to follow through on these threats unless the US and its allies cross certain Houthi or Iranian red lines, such as the Gulf states entering the war or ground operations against Iran, to avoid retaliation from the US and its allies that would jeopardize the groups domestic position. 

The Houthis have conducted several attacks targeting southern Israel since March 27, marking the group's first involvement in the war.  Attacks on Israel minimize the risk of entanglement with the Gulf states or the United States.  They draw retaliatory Israeli strikes on Yemen that only temporarily damage Houthi infrastructure while further rallying popular support for the group.

Yemen's Iran-Backed Houthis Continue to Eschew Attacks on Red Sea Shipping

 AEI's Critical Threats Africa File posted on 2 April 2026 an article titled "Red Sea" by Liam Karr.

While the Iran-backed Houthis in Yemen have attacked Israel on several occasions since 27 March, they have not resumed attacks on international shipping in the Red Sea, indicating a restrained approach that attempts to avoid major regional escalation.  

Why Yemen's Iran-backed Houthis Have Not Yet Resumed Attacks on Red Sea Shipping

 The House of Saud published on 27 March 2026 an analysis titled "The Houthis Could End Saudi Arabia's War in Forty-Eight Hours" by Abdul Mohammed.

Yemen's Iran-backed Houthis have not resumed attacks on international shipping in the Red Sea since the United States and Israel began bombing Iran.  The Houthis did recently resume attacks, however, against Israel.  The question is why the Houthis have not supported Iran by resuming the disruption of shipping through the Red Sea and Bab el-Mandeb choke point, putting even greater pressure on oil prices.

The reasons why the Houthis have held back so far include (1) they may be holding fire in order to serve as a strategic card to be played later by Iran; (2) they experienced earlier bombing by the United States that resulted in significant damage and don't want to deal with that situation again; (3) they see value in maintaining the detente they have with Saudi Arabia; and (4) they control a large civilian population which they don't want to endanger by attacks from Saudi Arabia or the United States.

The author also identifies four possible triggers that could lead to a resumption of Houthi attacks on international shipping in the Red Sea and Gulf of Aden.