Oil tankers carrying Saudi crude to Asia have reversed course in the Red Sea following warnings from Yemen's Houthi rebels against vessels calling at Saudi Arabian ports. Two prominent tankers, the VLCC Xin Long Yang carrying 2 million barrels of Saudi crude to China, and the Rodos with 700,000 barrels bound for India, turned back towards the Suez Canal. Another tanker, New Prime, also reportedly turned back before entering the Red Sea to load crude at Yanbu.
The diversions are a direct response to a Houthi naval blockade declared on Monday, expanding the conflict and heightening risks to global energy supplies. The alternative route through the Suez Canal and around Africa is expected to add several weeks to voyage times. For supertankers like the Xin Long Yang, this longer path also necessitates offloading half their cargo into the Sumed pipeline, traversing Egypt's Mediterranean coast, and then reloading at Sidi Kerir before continuing their journey, extending the voyage from approximately 7,000 miles to over 17,000 miles.
The disruption has significantly impacted shipping economics. War risk insurance premiums for vessels operating at Saudi Arabian ports have already begun to rise, and the cost of cargo insurance in the Red Sea has doubled amid Houthi attacks. This increase in insurance is expected to add hundreds of thousands of dollars to the cost of each voyage. Consequently, prices for physical crude cargoes in the Middle East, Europe, and Africa have surged to two-month highs.
