Since the outbreak of the US-Iran war, Saudi Arabia shifted its crude oil export focus to its own Red Sea ports, bypassing the Strait of Hormuz and shipping oil to Asian clients via the Bab el-Mandeb Strait. However, with the Houthi group continuing to launch attacks, and multiple Saudi oil tankers hit in recent days, this alternative route is at constant risk of being severed.

Saudi Arabia is now being forced to redirect more crude oil via longer, costlier, and more complex routes, such as Egypt's Suez Canal, or even around the southern tip of Africa.

Data from ship-tracking firm Vortexa shows that at least four oil tankers laden with Saudi crude reversed course and headed north towards the Suez Canal this week, just before reaching the southern Bab el-Mandeb Strait. Meanwhile, Saudi Arabia has started increasing quotas for crude loading at Egyptian Mediterranean ports.

In the first three weeks of July, seaborne crude oil volumes through the Suez Canal hit a two-and-a-half-year high, while throughput on the parallel Sumed pipeline rose 50% month-on-month.

Months of conflict have forced producers, traders, and shipowners to abandon traditional routes and continuously opt for costlier detours, reshaping the global crude oil flow landscape. Analysts warn that if Middle Eastern shipping risks persist, international oil prices could break through the $100 per barrel mark, stoking global inflation and placing greater strain on an already fragile world economy.

The Suez route is not immune to conflict threats either. Sources say senior officials from Iran's Revolutionary Guard have recently issued threats: if the US intensifies its strikes or plans a ground invasion, Iran will blockade the Bab el-Mandeb Strait and Red Sea shipping lanes and launch targeted attacks on passing merchant vessels. Despite mediation efforts by Saudi Arabia and Egypt, they have failed to persuade the Iran-backed Yemeni Houthi group to stand down.

Gregory Brew, Eurasia Group's Senior Analyst for Iran and Energy, stated: "While Saudi crude can still be exported from the Red Sea, the significantly longer voyage to Asian markets and soaring transport costs directly apply upward pressure on international oil prices."

Saudi media reported on Friday that a Saudi-flagged oil tanker was attacked in the Red Sea. The Saudi military subsequently launched retaliatory airstrikes on Houthi positions around the port of Hodeidah. Earlier this week, an oil tanker in the southern Saudi waters was hit by unknown projectiles and caught fire, with the Houthi group claiming responsibility for attacking two Saudi vessels using missiles and drones.

On Thursday, President Trump issued a warning: if the Houthis continue to attack merchant ships, their forces, along with Iran, would face "massive military retaliation." The US military launched its 13th consecutive night of airstrikes against Iran on Thursday evening, targeting military command centers, drone warehouses, and maritime combat facilities.

The global energy market is currently facing a dual shipping shock: crude oil flows through the Strait of Hormuz are nearly halted, while Ukraine continues to strike Russian crude infrastructure. The prolonged conflict has depleted market buffer stocks, and oil prices have surged due to supply disruption risks. Brent crude futures were trading around $97 per barrel on Friday, having briefly broken above $100 during Thursday's session.

Brew believes that the ongoing conflict will support oil prices staying above the $100 mark. Goldman Sachs analysts stated in a report this week that oil prices could surge to $120.

Helima Croft, Global Head of Commodities at RBC Capital Markets, said that if Houthi attacks persist, Red Sea crude oil shipments will significantly decline, completely overturning the market's optimistic assumption that "alternative transport solutions can always be found."

The military threat from the Houthis has directly neutralized the buffer channel Saudi Arabia relied upon to stabilize crude exports and curb a surge in global oil prices.

Richard Bronze, Head of Geopolitics at Energy Aspects, an energy consultancy, explained that after the conflict erupted, Saudi Arabia activated its East-West pipeline, boosting daily crude output from its Red Sea ports from 700,000-1 million barrels to 4.9 million barrels, roughly 5% of global crude supply. About 3.5 million barrels per day of this was shipped via the Bab el-Mandeb Strait to Asian buyers.

If the southern Mandeb route becomes completely unsafe for navigation, Saudi Arabia's only remaining option is the northern Egyptian route. However, the Suez Canal can only serve as a supplementary plan and cannot fully replace the Mandeb Strait. Crude must first be transported to Egyptian ports, where it is limited by the canal's depth restrictions for transshipment, then traverse the Mediterranean Sea, the Strait of Gibraltar, and sail around the Cape of Good Hope to reach Asia. This detour significantly increases freight and insurance costs, lengthens vessel occupancy times, and delays cargo deliveries by weeks.

Standard Chartered Bank noted that, compared to the Very Large Crude Carriers (VLCCs) primarily used for long-haul crude transport, product tankers carrying diesel and jet fuel are much more dependent on the Suez Canal, making the refined products market more vulnerable. Coupled with Ukraine's continued attacks on Russian refineries, global fuel prices are already high, further exacerbating the risk.

This shipping crisis has fully exposed the limitations of alternative routes for Middle Eastern energy chokepoints: even if geographical alternatives exist, regional geopolitical rivalries can still sever the transport lifeline.