Saudi Crude Shipments to US Plunge to Zero as Oil Refiners Pivot

For the first time in 35 years, the United States did not import any crude oil from Saudi Arabia. This marks a significant reversal from just a few months prior when Saudi Arabia had threatened to flood the American energy market with exports. The elimination of reliance on Middle East oil has been a long-standing objective for every US administration since Jimmy Carter's presidency in 1977.

Historically, when Joe Biden became US Vice-President 12 years ago, American refiners routinely imported approximately 1 million barrels per day of Saudi crude. At that time, Saudi Arabia was the second-largest crude supplier to the US, following Canada.

This shift comes as Saudi Arabia has recently been rerouting its oil exports due to Houthi attacks in the Red Sea. In April, Saudi Arabia was shipping over 4 million barrels daily from Yanbu. However, by June, Yanbu loadings had fallen to around 2.39 million barrels daily, a 41% decrease from the March peak and a 66% slump from the total Saudi export level of about 7.96 million barrels daily across both Gulf and Red Sea terminals in January. Saudi Arabia has shifted its onshore Arab Light volumes from the Persian Gulf to the 7 million barrels per day Petroline to the port of Yanbu on its western shores to bypass the Bab Al Mandeb strait.

While Saudi Arabia can utilize the Suez Canal and the SUMED pipeline to Egypt's Mediterranean coast, these routes have capacity limitations. The SUMED pipeline has a capacity of 2.5 million barrels daily, and other countries have already reserved some of that capacity. The Suez Canal can handle only about 1 million barrels daily. This suggests that Saudi oil flows could shrink unless the Houthi blockade is lifted. The Suez route is also more expensive and time-consuming; a cargo from Yanbu to South Korea takes about 24 days via Bab Al Mandeb, compared to 54 days via Suez and around the Cape of Good Hope. Chartering two Suezmaxes for the Suez route costs about $2 million more than a single VLCC through the Bab Al Mandeb strait.

The Houthis claimed strikes on Saudi Aramco facilities in Jizan and Yanbu in late July, which, if confirmed, would be the first direct attack on the kingdom's oil infrastructure since 2022. Yanbu's export terminal handled 92% of Saudi Arabia's seaborne crude exports in June, making it a critical vulnerability. As a result, Saudi Arabia has rerouted all crude exports destined for Asia through the Suez Canal after the Houthi rebels declared a maritime embargo on Saudi shipping.