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Red Sea Blockade Curbs Saudi Fuel Shipments, Boosts US LPG Exports, Vortexa Says

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Seaborne shipments of Red Sea-origin light petroleum products through the Bab el-Mandeb Strait have plunged by over a third from a record high earlier in July, squeezed by mounting supply constraints and the Houthi blockade, Vortexa strategists said in a note on Thursday.

Flows of gasoline, blending components, naphtha and natural gas liquids moving through the strategic waterway dropped by more than a third as of July 28 after climbing to a Vortexa dataset high of 1.6 million barrels on July 6.

Ellie Valencia, senior light ends market analyst at Vortexa, said that the decline underscores how supply disruptions have spread beyond the Persian Gulf into the Red Sea, raising concerns over exports from Saudi Arabia's western ports.

Saudi Arabia accounted for about 95% of seaborne oil moving through the Bab el-Mandeb in June.

Vortexa said that a blockade by the Houthis targeting Saudi Arabia has effectively placed those flows at risk, particularly cargoes departing from Yanbu, Rabigh and Jizan destined for Singapore, Indonesia and other Asian markets.

However, despite the security concerns, vessels continue to transit the chokepoint, although traffic has slowed.

Vortexa recorded 22 vessels and carriers passing through the Bab el-Mandeb on July 28, down from 27 on July 19, the day before the blockade announcement. Traffic fell to as few as 12 vessels on July 25.

Valencia said that the blockade, together with uncertainty over how it will be enforced, is prompting exporters to evaluate alternative shipping routes.

Cargoes avoiding the Bab el-Mandeb must instead transit north through the Suez Canal before sailing via the Strait of Gibraltar and around the Cape of Good Hope to reach Asian destinations, significantly extending voyage times.

For liquefied petroleum gas and ethane cargoes, a very large gas carrier sailing from Yanbu to Sariaya in the Philippines typically completes the voyage in 19 days via the Bab el-Mandeb. Vortexa said that without access to the Strait, the journey stretches to about 47 days.

The data analytics firm said that by comparison, a VLGC departing from the US Gulf Coast can reach Sariaya in about 35 days, potentially making US exporters more competitive if Red Sea routes remain constrained.

Valencia said fleet positioning also points to changing trade patterns. The number of ballast VLGCs and very large ethane carriers that last carried LPG or ethane and were moving from the Middle East toward the Atlantic Basin rose to 32 by July 27 from 18 at the beginning of the month.

The shift comes as US exporters benefit from ample inventories. LPG and ethane accounted for about 75% of US seaborne light-end exports in June, while domestic stockpiles were around 35% above the five-year seasonal average, providing scope for additional exports.

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