Saudi Arabia shifts oil exports to costlier Mediterranean route

Saudi Arabia is routing crude through a more expensive Mediterranean corridor as regional conflict closes its traditional export pathways, a shift that adds cost to every barrel and signals deepening supply-chain fragmentation in global oil markets.

Saudi Arabia has adopted a costlier workaround for its oil exports, using the East-West pipeline to move crude to Red Sea terminals at Yanbu before transferring it through Egypt's Sumed pipeline system to the Mediterranean. The route bypasses the Strait of Hormuz, through which roughly 20 million barrels a day — about a fifth of global consumption — normally flows, as Houthi strikes on Red Sea shipping have made the Bab el-Mandeb strait increasingly perilous for tanker traffic.

"The rerouting reflects a structural change in how Saudi crude reaches global buyers, not a temporary fix," said Omar Tariq, an energy analyst covering oil and commodity flows. "Every barrel that takes this path carries higher freight and handling costs, which ultimately feeds into the delivered price for refiners in Europe and beyond."

Brent crude traded near $82 a barrel on Monday, supported by the supply-chain adjustments. The shift adds an estimated $1 to $3 per barrel in transportation costs compared with the direct Red Sea route, traders said. Saudi Arabia's East-West pipeline has a capacity of 5 million barrels a day, while the Sumed system — jointly owned by Egypt, Saudi Arabia, and several other partners — can handle about 2.5 million barrels daily, meaning the alternative route can absorb only a portion of the kingdom's roughly 7 million barrels of daily exports.

The rerouting comes as Houthi attacks have cut Red Sea tanker traffic by more than 50% since late 2025, according to shipping data. Tankers that once sailed from the Persian Gulf through the Bab el-Mandeb to the Suez Canal are now diverting around the Cape of Good Hope or, like Saudi Arabia's cargoes, taking the overland pipeline detour through Egypt. The last time Saudi Arabia leaned heavily on the East-West pipeline was during the 2019 attacks on Aramco's Abqaiq and Khurais facilities, when the kingdom temporarily redirected flows to maintain export volumes.

The implications extend beyond freight costs. A sustained shift to the Mediterranean route reduces Saudi Arabia's flexibility to respond quickly to Asian demand spikes, since crude arriving at Mediterranean ports must then be reloaded onto tankers for longer voyages eastward. It also tightens the global tanker market, as the pipeline-and-transshipment process requires more vessels per barrel delivered. OPEC's next ministerial meeting on Sept. 4 will offer the first formal assessment of how these logistics constraints affect the group's production strategy.

This article is for informational purposes only and does not constitute investment advice.