Saudi Arabia is rapidly shifting its oil export strategy, increasingly relying on the Red Sea route as disruptions mount in the Strait of Hormuz amid the ongoing conflict in the Middle East. Approximately 30 Very Large Crude Carriers (VLCCs), each capable of carrying over 2 million barrels of oil, are now scheduled to load crude from the Yanbu port on Saudi Arabia’s Red Sea coast in the coming days, a dramatic increase from the usual two ships per month, according to reports from the financial press.
The surge in Red Sea traffic comes as Iran has effectively blockaded the Strait of Hormuz by attacking vessels passing through the vital waterway, escalating tensions following recent U.S. And Israeli strikes. This has prompted a scramble to find alternative routes for oil shipments, with Saudi Arabia and the United Arab Emirates (UAE) emerging as key players in offering land-based pipeline solutions.
Saudi Arabia’s “East-West Pipeline Network” (EW Network), a 1,200-kilometer pipeline connecting the eastern oil refining hub of Abqaiq to the western Red Sea port of Yanbu, is now seen as a critical alternative. The UAE’s Abu Dhabi Crude Oil Pipeline (ADCOP), spanning approximately 400 kilometers from the UAE’s oil gathering center in Habshan to the Fujairah oil terminal on the Gulf of Oman, also presents a viable option. Combined, these pipelines can handle up to 8.8 million barrels of oil per day, though this falls short of the 20 million barrels that typically transit the Strait of Hormuz.
The shift in tanker routes is impacting global shipping dynamics, with major tanker companies like Dynacom Tankers, Minerva Marine, Frontline, and COSCO Shipping all participating in the increased activity at Yanbu. Much of the oil being loaded at Yanbu is destined for China, with additional shipments heading to India and South Korea. The redirection of oil flows is occurring as storage facilities in the Gulf region rapidly reach capacity, prompting some oil producers to consider production adjustments.
The reliance on alternative routes isn’t without risk. Recent reports indicate a fire at the Ruwais refinery in the UAE, potentially caused by Iranian attacks, has forced a complete shutdown of the facility. While ADNOC, the operator of the Ruwais facility, has yet to confirm the incident, the vulnerability of key energy infrastructure remains a significant concern.
Experts note that the current situation highlights a fundamental principle in energy systems management: the importance of not only production capacity but also the efficiency of transportation networks. This concept, often referred to as a “bottleneck” in supply chain management, underscores that the performance of an entire system is limited by its weakest link. As Son Seong-ho, a researcher at the Korea Electric Research Institute, recently wrote, energy crises are often not about scarcity, but about logistical constraints.
The situation echoes challenges faced in Europe with the expansion of wind and solar power, where insufficient transmission capacity has led to curtailment of renewable energy generation. Similarly, South Korea has experienced output restrictions in regions like Jeju Island and South Jeolla Province due to limitations in the power grid. The global energy system, functions as a massive logistics operation, where the seamless flow of energy is paramount.
