Saudi Oil Shipments Resume Through Bab el-Mandeb Straight

Saudi Aramco announced Saturday it will resume immediately oil shipments through the Bab el-Mandeb strait that had been suspended since July 25 after two Saudi VLCCs were attacked by Yemeni Houthi militia.

Saudi Aramco announced Saturday it will resume immediately oil shipments through the Bab el-Mandeb strait that had been suspended since July 25 after two Saudi VLCCs were attacked by Yemeni Houthi militia.

Bab El Mandeb

The company announced then that shipments via Bab el-Mandeb were halted “in the interest of safety of ships and their crews and to avoid the risk of oil spill.” Oil prices rallied almost $2 dollars after the announcement. Aramco said it would continue to monitor the straight and was ready to take whatever action was necessary to ensure the safety and reliability of oil supplies.

Oil traders tend to focuson the Strait of Hormuz amid rising tensions between the US and Iran, however there are a number of chokepoints that can affect the flow of oil through and from the Middle East. On the other side of the Arabian Peninsula is the Bab al-Mandeb strait after Saudi Aramco reported attacks from Houthi rebels on two Saudi oil tankers. The rebels hit two very large crude carriers (VLCCs), each carrying 1 million barrels of oil withone of them sustained minor damage.

The Houthi Rebels said that they have the naval capability to hit Saudi ports and other targets in the Red Sea. In response, Saudi energy minister suspended oil shipments through the strait. “Saudi Arabia is temporarily halting all oil shipments through Bab al-Mandeb strait immediately until the situation becomes clearer and the maritime transit through Bab al-Mandeb is safe,” Khalid al-Falih said. 

Bab el-Mandeb. The Strait of Bab el-Mandeb is a narrow passage between the horn of Africa and the Middle East (between Djibouti and Yemen, specifically). It connects the Red Sea and the Gulf of Aden, or more broadly, it is the linkage between the Mediterranean and the Indian Ocean. This chokepoint saw just under 5 mb/d of oil traffic in 2016, but its importance is magnified for two reasons. First, most oil that has to pass through the Suez Canal/SUMED pipeline must first pass through the Bab el-Mandeb, so, tankers have multiple obstacles on this Middle East-to-Europe route. Second, it is, at this point, close in proximity to the war in Yemen.

Saudi energy minister Khalid al-Falid said the Kingdom of Saudi Arabia had made the decision to resume shipments after taking necessary measures to ensure the safety and security of ships transiting the strait and the southern parts of the Red Sea, the ministry said in a separate statement Saturday.

About Bab el-Mandeb Straight

The strait is an 18-mile-wide ‘chokepoint’ at the southern tip of the Red Sea between the Arabian Peninsula and the Horn of Africa, (between Djibouti and Yemen, specifically). It connects the Red Sea and the Gulf of Aden, as such the link between the Mediterranean and the Indian Ocean.The EIA said in 2016 4.8 million b/d of crude and refined products transited in 2016. The majority of Europe’s crude oil imports from the Middle East pass through the Red Sea, while the Middle East and Asia receive key refined products from Europe via the strait.

yemen bab el mandeb

Most oil that has to pass through the Suez Canal/SUMED pipeline must first pass through the Bab el-Mandeb, This traffic includes some of Asia’s crude oil imports from Libya, Kazakhstan, Azerbaijan, North Sea and Russia also transit Bab al-Mandeb. For the Kingdom the strait is critical for it’s own Red Sea refineries with both the 400,000 b/d Yanbu refinery and the 400,000 b/d Rabigh refining and petrochemical plant mainly supplied with crude oil produced in its eastern region and shipped from the Persian Gulf.

The ongoing risk is the proximity to the war in Yemen.

Source: SPGlobal

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