Oil above $100: Red Sea threat could add month to Asia shipments
Oil above $100 as Red Sea threat hits Asia routes
Oil prices recently exceeded $100 per barrel, raising concerns that the threat of conflict in the Red Sea could add an additional month to shipping times for cargo destined for Asia. The escalating violence around the Red Sea, particularly by Iran-backed Houthi militants, has tightened control over the Bab al-Mandab Strait, the narrow waterway connecting the Red Sea to the Gulf of Aden and Indian Ocean.
This region has become increasingly important for transporting Middle East crude oil, as the Strait of Hormuz has been severely restricted since the US-Iran war.
Before the war, approximately 20 million barrels of oil were shipped through the Strait of Hormuz daily, representing about a fifth of global oil supply. Saudi Arabia's Yanbu Red Sea terminal, which saw peak exports of 4.5 million barrels per day, began rerouting crude through the Bab al-Mandab Strait once supplies were redirected away from Hormuz. However, as the Houthi threat intensified, the flow of Saudi crude through the Bab al-Mandab Strait has dropped to around 400,000 barrels per day and continues to decline.
The situation has forced ships to take longer routes around Africa, adding approximately a month to transit time and significantly increasing fuel, freight, insurance, and crew expenses. Container ships and tankers now face a more challenging journey, impacting the reliability of oil shipments to Asian markets. Asian refiners are exploring alternative sources, which has contributed to the rise in crude prices.
The disruption in the Red Sea and increasing security concerns could have far-reaching effects beyond the oil market, impacting global fuel prices and consumer goods costs.
Written by urgent.news from Gulf News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
