Saudi Aramco Reroutes Oil Shipments Amidst Strait of Hormuz Disruptions

Saudi Aramco is actively rerouting crude oil exports to the Red Sea port of Yanbu in response to escalating tensions and disruptions in the Strait of Hormuz. This strategic shift aims to mitigate the impact of attacks that have significantly slowed shipping traffic through the critical waterway, a chokepoint for approximately 20% of the world’s oil trade.

Rising Tensions and the Closure of the Strait of Hormuz

The rerouting comes after the United States and Israel launched attacks on Iran on February 28, 2026, resulting in retaliatory actions by Iran, including ballistic missile and drone strikes targeting Gulf states. On March 2, 2026, the Islamic Revolutionary Guard Corps effectively blockaded the Strait of Hormuz, halting most oil tanker traffic. Hundreds of ships have anchored on either side of the Strait as a precaution, and Iran has threatened to fire upon any vessel attempting transit.

Utilizing the East-West Pipeline

Aramco is leveraging its 1,200-kilometer East-West Pipeline, originally constructed in 1981 as a contingency plan, to transport crude oil from eastern oilfields to Yanbu. The pipeline has a capacity of 5 million barrels per day (bpd) and was briefly capable of handling 7 million bpd in 2019 after modifications to natural gas liquid pipelines. House of Saud reports this is an emergency activation of the pipeline.

Logistical Challenges and Capacity Concerns

While the pipeline offers a viable alternative, logistical challenges and capacity constraints at Yanbu remain a concern. Crude loadings at Yanbu peaked at just under 1.5 million bpd in April 2020, according to data from Kpler. Reuters notes traders and buyers are unsure if Yanbu has the capacity to handle the full volume the pipeline can deliver. The rerouting may impact the capacity for transporting natural gas liquids (NGLs).

Impact on Global Oil Markets

The disruptions in oil supply have already impacted global oil markets, with Brent crude futures rising 12% this week. Reuters reports that without export routes, oil producers face the necessity of cutting production as storage tanks reach capacity. Iraq has already reduced output by nearly 1.5 million barrels per day due to full storage tanks.

Saudi Arabia’s Export Situation

Saudi Arabia exported approximately 7.2 million barrels per day in February, with 6.38 million bpd passing through the Strait of Hormuz. Reuters indicates Aramco has informed some buyers of Arab Light crude that they must now load cargoes at Yanbu.

Refinery Operations

Aramco shut down its largest domestic refinery at Ras Tanura on Monday, March 4, 2026, following a drone attack. Economic Times reported this development.

Aramco declined to comment on the situation.