Saudi oil exports via Egypt pipeline double to 2.3M bpd

Saudi Arabia has more than doubled its oil exports through Egypt's Mediterranean port of Sidi Kerir in August, reaching about 2.3 million barrels per day, up from roughly 1 million barrels per day in July, according to trade intelligence firm Kpler. The shift comes as Riyadh seeks alternatives to the Red Sea after Yemen's Houthi movement, allied with Iran, declared a maritime embargo on the kingdom.

The surge in Sidi Kerir exports is largely Saudi crude, said Matt Smith, director of commodity research at Kpler. The port is linked by the Sumed pipeline to the Red Sea port of Ain Sokhna. Because fully loaded supertankers are too heavy to transit the Suez Canal, they pump half their Saudi oil cargo into the pipeline at Ain Sokhna, pass through the canal, and collect it at Sidi Kerir, Smith explained.

Smith described the move as a distinct change in strategy, not a short-term decision. Saudi Arabia is under pressure as Iran and its allies target major oil chokepoints in the Middle East. Riyadh had already rerouted millions of barrels per day through a pipeline from its eastern region to the Red Sea port of Yanbu after Iran choked traffic through the Strait of Hormuz earlier this year. However, Houthi attacks on Saudi tankers in the Red Sea are now threatening exports from Yanbu through the Bab el-Mandeb Strait.

Saudi exports from Yanbu through the Bab el-Mandeb fell nearly 90% to 1.3 million barrels during the week of August 3, compared with 11 million barrels for the week of July 20, when the Houthis announced the embargo, Kpler data shows. Tankers carrying Saudi crude in the Red Sea often sail with transponders off to avoid Houthi attack, making precise flows hard to track. Saudi Aramco CEO Amin Nasser said on an August 4 earnings call that the kingdom has optionality through multiple access routes and alternative pathways to the Mediterranean via the Sumed pipeline and Suez Canal.

Most oil exports from Sidi Kerir are heading to the U.S. and Europe rather than Asia, Smith said. This suggests Asian customers are selling cargoes because it is not cost effective for them to take the longer route around Africa, which Nasser said adds about 25 days compared with the Bab el-Mandeb route. Smith noted a domino effect: Europe is getting more Saudi crude, so West African crude that would have gone to Europe may now go to Asia.

Redirecting Saudi flows through Egypt is unlikely to eliminate attack risk entirely. Drones struck two liquefied natural gas ships at Egypt's Port of Damietta on July 30, and no one has claimed responsibility for those strikes.