Red Sea dangers delay Saudi and Iraqi oil export as ships divert

Oil deliveries from Saudi Arabia and Iraq totaling almost 9 million barrels are delayed as tankers switch routes to travel the longer way around Africa, rather than transiting the Red Sea.

Ships that loaded crude oil and refined products this month from Saudi Arabia’s Ras Tanura and Jubail ports, and Iraq’s Basra have changed course, sailing away from the Bab el-Mandeb strait at the entrance to the southern Red Sea, according to ship-tracking data on Bloomberg. Most diverted on or after Jan. 12, when US and UK forces hit the Houthis in Yemen with airstrikes and the militants said they’d step up attacks in response. 

The diverted vessels are heading toward Africa. That’s a longer voyage from the Middle East to refiners and consumers in Europe. The detour can add more than two weeks’ sailing time when compared with the trip from the Persian Gulf through the Red Sea and Suez Canal.

The diversions and delays highlight the chaos in the shipping industry that’s spilling over into the wider economy and raising the risk of inflation as flows of food and other goods get disrupted. Heads of the biggest carriers expect the threat to remain for months even as the US continues to target the Houthis in an effort to deter attacks. 

While oil tankers don’t appear to have been purposely targeted so far, many vessel owners want to avoid the risk. The Middle East, which produces about a third of the world’s crude, ships most of it to Asia and those supplies aren’t affected. Crude prices in London are below $80 a barrel. 

But sales to Europe have become more important after the continent largely cut off imports of Russian energy. Rerouting tankers adds transit costs and delays can create inefficiencies in the market. 

At least two vessels carrying nearly 3 million barrels of Saudi crude and refined products are likely to be delayed after loading in the Persian Gulf this month. Another five tankers with as much as 6 million barrels of crude from Iraq have also diverted away from the Red Sea.