Cost of bypassing Hormuz and Bab el Mandeb
As a result of Iran and the Houthi group disrupting the main oil export routes, the Strait of Hormuz and the Bab al-Mandeb, Saudi Arabia has had to turn to exporting its oil via the Suez Canal in Egypt. Although it had used this route in the past, it has not been a primary route for decades. The new route adds approximately a month to the journey time and significantly increases shipping costs, with expenses reaching about $2.87 million per voyage compared to $1.26 million via traditional routes. Additionally, attacks on oil tankers in the Red Sea impose further restrictions, making transportation more difficult. This has led Saudi Arabia to offload part of the tanker cargo onto the Suez-Mediterranean (SOMED) pipeline and connect it to the Mediterranean Sea, ensuring the continuous export of oil to Asian markets, which are now among the largest consumers of Saudi oil.
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