Add a month at sea and $2.5 million - what it costs oil tankers to flee Hormuz and Bab el-Mandeb

Disruption of Saudi Arabia’s key oil export routes through the Hormuz and Bab el-Mandeb straits due to Iran and Iran-allied Houthi activity forces Saudi exporters to reroute oil via Egypt’s Suez Canal. This increases logistical friction and route risk, which is typically supportive of higher crude volatility and prices. The development is likely to weigh on market sentiment around global oil supply security.

Analysis

Disruption of Saudi Arabia’s key oil export routes through the Hormuz and Bab el-Mandeb straits due to Iran and Iran-allied Houthi activity forces Saudi exporters to reroute oil via Egypt’s Suez Canal. This increases logistical friction and route risk, which is typically supportive of higher crude volatility and prices. The development is likely to weigh on market sentiment around global oil supply security.