Saudi Arabia Reroutes Oil Shipments Amidst Hormuz Strait Concerns
Saudi Arabia is increasing oil shipments through the Red Sea as tensions escalate in the Strait of Hormuz, a critical chokepoint for global oil trade. This shift comes as ship traffic through the Strait has significantly decreased, raising concerns about potential disruptions to energy supplies.
Strait of Hormuz: A Vital Oil Transit Route
The Strait of Hormuz, separating the Arabian Peninsula and Iran, is one of the world’s most strategically crucial oil transit points. In 2025, an average of 20 million barrels per day (mb/d) of crude oil and oil products were shipped through the Strait, representing around 25% of the world’s seaborne oil trade IEA. The Strait is only 29 nautical miles wide at its narrowest point, with 2-mile-wide navigable channels for shipping.
Several nations rely heavily on the Strait of Hormuz for oil exports, including Iran, Iraq, Kuwait, Qatar, and Bahrain. Saudi Arabia and the United Arab Emirates (UAE) have alternative export routes, but a closure of the Strait would still have significant global repercussions. It would also impact global gas trade, potentially stranding Liquefied Natural Gas (LNG) exports from Qatar and the UAE, which account for almost 20% of global LNG exports IEA.
Increased Red Sea Shipments
In early March 2026, Saudi Arabia boosted oil loading from terminals on the Red Sea, specifically in Yanbu and Al Muajjiz, to record levels Reuters. Eight tankers, each capable of carrying approximately 2 million barrels, loaded oil from these terminals in the first week of March. This increase is a direct response to the reduced traffic through the Strait of Hormuz.
Only two cargo ships transited the Strait of Hormuz between Thursday and Friday, indicating a substantial decrease in activity Reuters. The Iranian Revolutionary Guard has previously threatened to target ships attempting to pass through the Strait.
Saudi Arabia’s Pipeline Capacity
Saudi Arabia’s ability to reroute oil flows is largely dependent on its East-West pipeline WSJ. There is a pipeline capacity of 3.5 to 5.5 mb/d that can redirect crude flows to avoid the Strait of Hormuz IEA. While lasting disruptions are considered unlikely, even a short-lived closure would significantly impact oil markets IEA.
Impact on Global Markets
The situation highlights the vulnerability of global oil supplies to geopolitical tensions in the Middle East. While Saudi Arabia is taking steps to mitigate potential disruptions, the reliance on the Strait of Hormuz remains a significant concern for energy security worldwide.