Aramco is unlikely to suspend West-bound crude oil exports after the Houthi missile attacks against two Saudi tankers in the Bab el Mandeb strait, The National reports citing oil analysts. Riyadh announced that it would stop shipments via the chokepoint after the attacks, and this sparked worry that Saudi exports would be disrupted, raising prices.
However, it is unlikely that Saudi Arabia would allow such a dent in exports.
“Overall Saudi export volumes should not be reduced by this decision, although there will be some short-term disruptions and the announcement has created concerns in the crude market and related areas such as shipping insurance,” Richard Mallinson from Energy Aspects said.
Some of the alternative routes that Saudi oil could be shipped through include the maritime route via the Horn of Africa, which is longer and more expensive, and the East/West Saudi pipeline to the Yanbu refinery on the Red Sea. From Yanbu, the crude could be shipped via the Suez Canal, Iman Nasseri from Facts Global Energy told The National.
In any case, for a while Saudi exports to the West will be more expensive, but this should not be a major problem for Aramco. The company only ships around half a million barrels daily via the Bab el Mandeb chokepoint, compared to an average daily total of 6 million barrels. Related: Ford Starts Up $4B Autonomous Vehicle Unit
What’s more, Saudi Arabia has built substantial oil inventories in Egypt that it can now use to keep its European clients supplied until the shipment suspension lifts.
Bab el Mandeb is one of the most important oil chokepoints globally, accounting for as much as 5.8 million barrels of oil and oil productions daily as of 2016, and probably more today. While in the past the main risk in the area came from African pirates, the war in Yemen has added the risk of missile attacks from the Arabian Peninsula as well.
By Irina Slav for Oilprice.com
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