Hormuz is stalled, oil tankers are flocking to reroute via the Red Sea—there are already 30 of them!

The fires of war in the Middle East are reshaping the global crude oil transportation landscape. After the near paralysis of the Strait of Hormuz, around 30 supertankers are collectively diverting to Saudi ports on the Red Sea, a number far exceeding historical averages and reflecting the profound shocks Middle Eastern energy exports are currently facing.

According to ship brokers, about 30 very large crude carriers (VLCCs) are set to head to Yanbu, the Saudi port on the west coast, in the coming days, whereas the historical average monthly arrivals at this port are just around two. Meanwhile, Saudi Aramco, the national oil company, disclosed a plan this week to export about 5 million barrels of crude daily via the Red Sea, to make up for the gap caused by the disruption of the Hormuz shipping route.

This large-scale rerouting is a direct result of the near shutdown of the Strait of Hormuz. Iranian attacks on passing ships and infrastructure have brought almost all oil exports from the gulf region via Hormuz to a standstill. Oil-producing countries such as Iraq, Kuwait and the UAE have successively reduced output as storage facilities in the gulf area reach capacity. For investors, the global crude oil supply chain is experiencing a forced reorganization; whether the risk premiums and shipping capacity of new routes can meet demand will be core variables the market is watching closely.

Rerouting Wave: 30 VLCCs Head Simultaneously to Yanbu

Based on ship brokers' tracking transponder signals and this month's loading agreements, about 30 VLCCs are heading to Yanbu—a rare surge compared to the long-term monthly average of about two.

Matthew Wright, Chief Freight Analyst at the Kpler data platform, said, "Yanbu's popularity has risen sharply, and this situation won’t change in the short term." He added that tanker movements in the Red Sea have "gradually" resumed after Houthi attacks were suspended last year, while the dense attacks on oil tankers near Hormuz this week were "ironclad proof… Iran has the capability and is actively targeting vessels."

John Ollett, Argus Freight Specialist, said, "Given the disruption at the Strait of Hormuz, there’s no alternative. The Houthis haven’t launched attacks for months, and Yanbu is currently the only option for crude exports."

Saudi Arabia’s ability to implement this scheme relies on a key piece of infrastructure linking east and west—the oil pipeline connecting Saudi’s eastern production areas to the western port of Yanbu. Typically, most of the country’s daily 7 million barrels of exports enter the Persian Gulf from the east coast; this pipeline provides an outlet amid the current dilemma.

Major Shipowners and Cargo Flows

The shipowners involved in this rerouting include several international shipping giants.

According to ship brokers, Greek billionaire George Prokopiou’s Dynacom Tankers and Andreas Martinos’ Minerva Marine have both dispatched vessels, and both had ships pass through Hormuz this month. Norwegian shipping magnate John Fredriksen’s Frontline and China’s state-owned Cosco are also part of the fleet changing course. Dynacom, Minerva, Frontline, and Cosco did not immediately respond to requests for comment.

Brokers said most of these shipments are so-called "contract cargo"—long-term agreements to transport Saudi crude to Asia. The parties involved have renegotiated these agreements, changing the loading port from Persian Gulf terminals to Yanbu. The destination is mainly China, with small volumes headed to India and South Korea.

Dual Risks of the New Route

Detouring via the Red Sea is not without cost. Tankers entering the Red Sea from the south must cross the Bab al-Mandab Strait, where the Houthis have attacked passing ships multiple times in recent years, and the area is also within the range of some Iranian missiles.

Martin Kelly, Head of EOS Risk intelligence, said tankers traversing the Bab al-Mandab Strait still face "tremendous risk." He pointed out that the more direct threat comes from Iran’s strike capabilities—which cover not only the Red Sea but a much wider area.

Theoretically, tankers loaded at Saudi’s west coast can head north through the Suez Canal to Asia, but this would lead to significant increases in transit time and costs.

Matthew Wright said, "When it comes to risk for Middle East energy assets, anything is possible. But you must keep operating—every port capable of loading cargo is being maxed out." The Houthis began attacking Red Sea merchant ships after the Gaza conflict erupted in October 2023, and gave signals to halt attacks after the Gaza ceasefire in November last year, but the relevant risks have not disappeared entirely.

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