Under the Hormuz Blockade, Saudi Arabia "Changes Course to Survive," Red Sea Port of Yanbu Exports Nearing 5 Million Barrels Target

Amidst the ongoing blockage of the Strait of Hormuz, the global energy transportation landscape is being rapidly reshaped. Latest reports indicate that Saudi Arabia is significantly increasing its crude oil exports via the Red Sea, bypassing this critical chokepoint through the East-West pipeline in an attempt to hedge against supply shocks from the Middle East situation. However, the overall deficit remains difficult to fully bridge.

According to reports on Wednesday, March 25th, US Eastern Time, since the near-complete halt of transportation through the Strait of Hormuz in late February, Saudi Arabia has rapidly adjusted its export routes, diverting crude oil originally destined for export via the Persian Gulf to the Red Sea port of Yanbu, significantly increasing the shipping capacity of this channel. In just over two weeks, crude oil exports from Yanbu port have doubled.

Shipping data shows that in the five days leading up to Tuesday this week, crude oil loadings at Yanbu's northern and southern terminals reached an average of about 4.4 million barrels per day, approaching the target level of 5 million barrels per day.

Behind this adjustment lies the severe impact of the "strangulation" of the Middle East's energy artery. The Strait of Hormuz once handled about 15 million barrels per day of global crude oil transportation. Its current large-scale blockage has directly driven up international oil prices and triggered a chain reaction of refiners scrambling for alternative crude and fuel shortages in some regions.

Against this backdrop, Saudi Arabia is one of the few oil-producing countries capable of "rerouting." Its core infrastructure—the East-West pipeline connecting the Abqaiq processing center in the east to the Red Sea port of Yanbu—has a nominal capacity of about 7 million barrels per day. However, due to the priority given to domestic refineries, power generation, and desalination needs, the actual available increment for export is limited, around 5 million barrels per day.

Even so, Saudi Arabia's "diversion" is unlikely to fully fill the gap. According to media calculations, even if Yanbu's exports reach the target level, it will only compensate for about half of the Persian Gulf's export losses this month, with overall export volumes still about 2 million barrels per day lower than before the conflict.

More critically, a large volume of already loaded crude oil remains stranded in the Persian Gulf. Data shows that approximately 56 million barrels of Saudi crude are currently trapped in the Gulf waters, unable to be shipped out through the Strait of Hormuz. Meanwhile, at least 40 Very Large Crude Carriers (VLCCs) are anchored near Yanbu awaiting loading, reflecting the extreme pressure on the logistics system.

In terms of flow, Saudi Arabia is prioritizing demand from Asia. China and India are the primary destinations for exports from Yanbu, with South Korea, Pakistan, and Thailand also receiving shipments. Japan is partially supplementing its supply through oil storage facilities in Okinawa. Concurrently, supplies to Europe and the East Coast of North America are increasingly being completed through the alternative Red Sea-Suez-Mediterranean route.

In fact, arrangements to "bypass Hormuz" had already shown signs. Several media outlets had previously reported that Saudi Arabia's continuous strengthening of its East-West pipeline and Red Sea port system in recent years was precisely to preserve strategic export channels amidst extreme geopolitical risks. The current conflict has become the first large-scale practical test of this "backup system."

However, the market widely believes that the efficiency and scale of this alternative solution still have significant bottlenecks. On one hand, the pipeline and port capacities are limited and cannot fully replicate the export volume from the Persian Gulf. On the other hand, the lengthening of transportation routes and the increased complexity of scheduling also drive up logistics costs and delivery uncertainties.

While supply is constrained, the chain reaction on the demand side is becoming apparent. Some Asian countries are accelerating their oil stockpiling efforts, while European refineries are forced to pay higher premiums for alternative crude, reigniting concerns about energy security.

Overall, while Saudi Arabia's "Red Sea breakout" has provided some buffer for the global market in the short term, it also highlights a deeper change: in the context of normalized geopolitical conflicts, the global energy supply chain is shifting from "efficiency first" to "security first." The strategic risk premium for critical nodes like the Strait of Hormuz is being repriced.