Vessel traffic through the Bab el-Mandeb Strait rose to 28 on Monday, a four-day high, but remained well below the July 14 peak of 46, keeping India exposed to higher freight, insurance and delivery costs as Houthi threats put Saudi Arabia’s alternative oil-export corridor at risk.
Saudi Arabia’s East-West pipeline allows crude to bypass the constrained Strait of Hormuz and reach Yanbu on the Red Sea. But cargoes headed to India and other Asian markets must still cross Bab el-Mandeb, turning the waterway into a second choke point for supplies already travelling through an emergency route.
The volatility has already affected India’s crude costs. The Indian crude basket fell $14.50 from $103.33 a barrel on July 23 to $88.83 on July 27. Brent declined 1.44% to $86.67 on July 28, but remained 17.26% higher over the past month and 20.91% above its year-ago level.
However, elevated shipping costs continue to add to the landed price of crude. Very large crude carriers were assessed at around $135,700 per day, while Suezmax and Aframax tankers commanded about $124,500 and $143,300 per day, respectively. The costliest individual Red Sea-to-India fixture was assessed at $215,775 per day, underscoring the freight pressure facing Indian refiners even when physical supplies remain available.
Saudi Arabia can redirect oil north through the Suez Canal if Bab el-Mandeb becomes unusable, but the option is costly and operationally difficult. Fully laden very large crude carriers, which typically carry around 2 million barrels, cannot cross the canal because of draft restrictions. They would need to discharge part of their cargo into smaller vessels or the 320-km Suez-Mediterranean pipeline.
Asian cargoes would then emerge in the eastern Mediterranean instead of the Indian Ocean, requiring longer routes and more tankers. The detour could add about 25-30 days to a Saudi-Japan voyage and a similar period on the return leg. India’s additional transit time would be lower, but refiners would still face longer voyages, extra handling, higher insurance premiums and less predictable deliveries.
One near-term risk eased after crude exports from Russia’s Novorossiysk terminal resumed on July 27 following a halt since July 20. The Black Sea port handles CPC crude from Kazakhstan and Russian Urals cargoes headed to India. A prolonged shutdown could have delayed supplies and squeezed access to discounted barrels.
“Saudi crude exports through Bab el-Mandeb remain ongoing despite a marked decline in transit volumes following Houthi attacks,” said Sumit Ritolia, senior manager, modelling, at Kpler.
MarineTraffic recorded 100 verified Bab el-Mandeb crossings between July 24 and 26, against only 29 through Hormuz. Saudi Arabia’s Yanbu terminal exports around 4 million barrels per day, of which about 2.5 million bpd travels south through Bab el-Mandeb, according to Rystad Energy.