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Saudi Red Sea Crude Exports Peak in March, Fall 41% by June, Wood Mackenzie Says

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Saudi Arabia's shift of crude exports to its Red Sea terminal at Yanbu following the disruption of traffic through the Strait of Hormuz peaked in March before declining sharply over the following three months, Wood Mackenzie analysts said in a Friday note.

The development comes even as almost all of the country's seaborne crude exports continued to use the alternative route.

They said 86.7% of Saudi crude liftings originated from Yanbu in March, totaling 121.9 million barrels across 77 cargoes, or about 4.07 million barrels per day.

Yanbu's share of Saudi exports increased to 93.6% in April, 94.3% in May and 98.6% in June, when only a single cargo of about 1 million barrels departed the Gulf terminal of Ju'aymah.

Despite the growing reliance on Yanbu, export volumes steadily declined. Loadings from the Red Sea terminal fell to about 2.39 million b/d in June, down 41% from the March peak and 66% below Saudi Arabia's combined Gulf and Red Sea crude exports of about 7.96 million b/d in January, Wood Mackenzie data showed.

The shift in export routes also altered Saudi Arabia's customer mix. During June and July, cargoes were concentrated in South and East Asia.

A total of 11 shipments bound for Egypt's Ain Sukhna for onward pipeline transport, five for Malacca, four for Karachi, three each for New Mangalore and Sikka in India, and two each for Ulsan and Yeosu in South Korea and Yokkaichi in Japan.

No direct crude cargoes from Saudi Red Sea terminals were delivered to Europe during the period.

Refined product exports from the Middle East Gulf continued at reduced levels. Wood Mackenzie recorded 171 product cargoes during June and July, including jet fuel shipments to Pembroke in the United Kingdom and Le Havre in France, and ultra-low sulfur diesel cargoes to Constanta, Romania.

Four product cargoes also loaded at Saudi Arabia's Gulf coast port of Jubail in early July, suggesting limited commercial transit remained possible for smaller vessels.

"For months, the market treated Yanbu as the answer to Hormuz risk," Ian Solis, a data analyst in Wood Mackenzie's Tech/Maritime-Ops team, said.

Solis added that the problem is that Yanbu has its own chokepoint. The analyst said that if Bab el-Mandeb comes under sustained disruption from a declared Houthi naval blockade, Asia stands to lose a major crude supply artery.

"What looked like diversification was in reality a shift from one strategic bottleneck to another," Solis said.

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