The "double-throat crisis" reshapes global energy shipping! Saudi oil is forced to initiate a "Mediterranean grand pivot" with oil prices likely to rise in the short term but difficult to fall.

Since the Iran-backed Houthi militant group announced artillery attacks on Saudi energy transports and maritime blockades, Riyadh has been seeking alternative export routes beyond the Red Sea. As a result, Saudi Arabia has significantly increased oil exports via a pipeline running through Egypt to the Mediterranean region. The substantial increase in oil exports from Saudi Arabia through the SUMED pipeline to the Mediterranean, particularly to the Sidi Kerir port, is essentially not about "increasing global crude supply," but rather a strategic restructuring of export routes in response to the constraints in the Strait of Hormuz and Houthi threats in the Bab el-Mandeb Strait. In August, exports from the Sidi Kerir port surged from approximately 1 million barrels per day in July to about 2.3 million barrels per day, with the vast majority being Saudi crude; independent shipping data from Reuters indicated that the loading volume at this port reached a record approximately 2.17 million barrels per day last week, with around 90% being Saudi crude. This route allows Saudi crude oil to bypass the southern end of the Red Sea, but at the cost of significantly increased transportation distances, freight charges, insurance costs, and delivery times. For Asian buyers, bypassing the Cape of Good Hope could add approximately a month to the journey. Consequently, the SUMED pipeline serves more as an extreme "safety valve" in the global energy transport market, rather than as new capacity capable of eliminating supply risks in the short term. The international oil price benchmarkBrent crude futuresaccurately reflects a two-way game of "geopolitical supply risk supporting the lower bound, while demand destruction suppresses the upper bound." Brent crude prices had closed above $100 per barrel on July 23 due to Houthi attacks and escalating U.S.-Iran tensions, but by August 13, they had retreated to about $88.56 per barrel, while WTI crude stood at about $82.72 per barrel. Aside from deteriorating demand expectations, a surprising increase of 17.4 million barrels in U.S. crude inventories last week also exerted short-term pressure. However, supply has not returned to normal: U.S.-Iran negotiations remain stalled, and shipping volumes in the Strait of Hormuz are still significantly below pre-war levels. After the Houthi group announced a maritime blockade against Saudi shipping on July 20, they also claimed to have attacked Saudi tankers, Yanbu facilities, and the Jazan refinery, forcing an increasing number of tankers to shut off their AIS and operate "dark" routes, leading to a noticeable decline in traffic through the Bab el-Mandeb Strait. In other words, Saudi Arabia is facing a rare "double choke point risk" of export obstructions to the east through Hormuz and threats to the southwest through the Bab el-Mandeb Strait. The SUMED exports seem only to alleviate but cannot completely replace these two global shipping routes. The current high oil prices are not indicative of a healthy demand-driven supercycle, but are shaped by "choke point obstructions in transport + inventory depletion + war risk premium." The surge in SUMED exports itself proves that the global oil logistics system is under pressure. In the short term, crude oil still carries strong upward tail risks, but once geopolitical risks are genuinely resolved, the supply peak that may begin in 2027 could become the strongest mean-reversion force for oil prices. The Red Sea risk forces a "Mediterranean pivot"! With Saudi oil exports rerouted through SUMED, is the oil market entering a high-cost new normal of "bypassing the Red Sea"? According to data provided by the trade intelligence company Kpler, in August, Saudi oil exports through Egypt's Mediterranean port of Sidi Kerir have more than doubled compared to the previous month, increasing from about 1 million barrels per day to approximately 2.3 million barrels per day. Matt Smith, head of commodities research at Kpler, noted that the vast majority of this is crude oil exported from Saudi Arabia. Smith stated, "This is not a short-term decision. It reflects a significant change in strategic or market dynamics." Sidi Kerir connects to the Red Sea port of Ain Sokhna via a pipeline called SUMED. Smith noted that fully loaded supertankers have a deep draft and cannot pass through the Suez Canal; therefore, these tankers will pump half of their Saudi crude cargo into the pipeline at Ain Sokhna, then travel through the Suez Canal and reload this portion of crude oil at Sidi Kerir. As Iran and its allies continue to exert pressure on the Strait of Hormuz, the main oil transport chokepoint in the Middle East, Saudi Arabia is facing increasing pressure. This year, due to Iran's restrictions on shipping in the Strait of Hormuz, Riyadh has been rerouting millions of barrels of crude oil daily through a pipeline from Saudi Arabia's Eastern Province to the Red Sea port of Yanbu. However, recent attacks by the Houthi group on Saudi oil tankers in the Red Sea are again putting pressure on oil exports through Yanbu, which cross the Bab el-Mandeb Strait. Smith remarked, "A massive reconfiguration of transport patterns is taking place here. It's clear that the Saudi government is not taking this lightly, and they expect it to become a new trend." Kpler's data shows that in the week ending August 3, Saudi crude exports via Yanbu and across the Bab el-Mandeb Strait fell to 1.3 million barrels, down nearly 90% from 11 million barrels in the week ending July 20, when the Houthis announced the blockade. Tankers transporting Saudi crude in the Red Sea often shut off their transponders to evade Houthi attacks, making it difficult to accurately gauge oil flows. However, Amin Nasser, CEO of Saudi Aramco, which is controlled by the Saudi government, made it clear earlier this month that Riyadh has alternatives to bypass the southern Red Sea and the Bab el-Mandeb Strait. Nasser stated during Saudi Aramcos earnings call on August 4, "As you know, we have multiple options to access the Mediterranean through various channels and alternative routes via the SUMED pipeline and the Suez Canal." However, for Asian customers who typically source oil from Saudi Arabia, tankers must detour around Africa, resulting in longer journeys and higher costs. Nasser indicated during the conference call that this route adds about 25 days compared to exports through the Bab el-Mandeb Strait. Smith noted that most of the oil currently being exported from Sidi Kerir is going to the U.S. and Europe, rather than to the Asian energy demand regions. This suggests that Asian customers are selling these cargoes because "it is not cost-effective to send them all the way around Africa." Smith observed, "We are witnessing a domino effect. Europe is acquiring more crude oil from Saudi Arabia, and thus, perhaps West African crude that would have originally gone to Europe is now redirected to Asia." However, rerouting Saudi oil through Egypt is unlikely to completely eliminate the risk of attacks. On July 30, two LNG tankers at Egypt's Damietta port were hit by a swarm of large drones whose source has not yet been identified. No party has yet claimed responsibility for these attacks. Behind the divergence between IEA and OPEC demand, the oil market may be facing a major transformation of "tightening followed by loosening." Saudi Arabia's significant increase in oil exports through Egypt's SUMED pipeline to Sidi Kerir is essentially a strategic restructuring of export routes in response to the constraints in the Strait of Hormuz and the Houthi threats in the Bab el-Mandeb Strait, and it does not signify the emergence of new capacity that can eliminate supply risks. On the demand side, there has been an extremely rare divergence between OPEC and the IEA. OPEC has revised down its growth forecast for 2026 demand for the fourth consecutive month, currently projecting an increase of 580,000 barrels per day in global oil demand, but raising its 2027 growth expectation to about 2.16 to 2.2 million barrels per day. The IEA, meanwhile, is much more pessimistic, predicting a direct decrease of 1.6 million barrels per day in global demand for 2026, further downgrading by about 510,000 barrels since last month, but also forecasting a robust rebound of 2.4 million barrels per day in 2027 demand. What is truly driving this year's oil prices to remain at high levels of $80 to $90 is that the rate of supply decline is outpacing that of demand decline: the IEA expects global supplies to decrease by 4.3 million barrels per day to about 102 million barrels per day by 2026, with a supply-demand gap of around 1.8 million barrels per day in the third quarter. Global observable inventories have decreased by about 410 million barrels since the outbreak of the war. Thus, even if the IEA believes demand has been severely damaged, the spot market remains fundamentally short, rather than experiencing a traditional demand-driven bear market. In the future, crude oil price trajectories are more likely to exhibit a very typical trend of "geopolitical risk bull market in 2026, followed by supply normalization pressure testing in 2027": as long as Hormuz does not stabilize and open, and the Houthis continue to threaten the Bab el-Mandeb Strait, there exists a clear war risk premium below Brent crude prices. Any new attack on tankers, ports, or pipelines could quickly involve a return to trading at $95 to $100 or even higher tail risks. However, if a credible agreement is reached between the U.S. and Iran, and normal shipping is restored in both straits, Middle Eastern output could rapidly return, and weak demand would immediately transform from a secondary to a primary conflict. The IEA forecasts that global supplies will rebound astonishingly by 8.3 million barrels per day to 110.3 million barrels per day in 2027, while demand only increases by 2.4 million barrels per day, suggesting that the market could face a huge surplus of about 4.6 million barrels per day at that time according to current predictions.