Aramco is trying to reroute crude following Hormuz closure

Saudi Arabia is leveraging alternative pipeline networks to pivot crude exports to the Red Sea as the Strait of Hormuz remains blocked. Aramco is trying to reroute crude through its East-West Pipeline to the Yanbu terminal on the Red Sea, unnamed sources told Reuters. The pipeline can handle up to 7 mn bbl / d, meaning Aramco can bypass the Hormuz chokepoint for a massive chunk of its c.10 mn bbl / d output.

The pivot isn't without friction: Moving the bottleneck to the Red Sea has caused shipping rates at Yanbu to more than double to USD 28 mn per tanker, as some operators choose to avoid the wider region entirely. To help clear the Red Sea backlog, Egyptian Oil Minister Karim Badawi confirmed Cairo can step in to pump Saudi crude directly to the Mediterranean via the Sumed pipeline.

The UAE also has alternative routes — but they may have been compromised. Its Habshan-Fujairah link can keep critical export flows moving, according to a new Moody’s Ratings report. The fate of the pipeline is up in the air after falling debris from a drone hit the Fujairah Oil Industry Zone yesterday morning.

The crisis is exposing a stark regional divergence. While Saudi Arabia and the UAE's infrastructure is providing a shield, neighbors like Kuwait, Qatar, Bahrain, and Iraq face severe fiscal pressure due to their near-total reliance on the strait. Regional energy importers like Egypt, Jordan, and Turkey are also on edge, facing a triple threat of surging energy prices, tightening financing, and widening external imbalances.

What’s next: Moody’s base case is that the disruption will last only a few weeks. However, the ratings agency projects that a prolonged closure would trigger a severe shock to regional credit markets and spike refinancing risks for energy-heavy issuers.

MEANWHILE- The US Navy will escort oil tankers through the Gulf, US President Donald Tump said in a post on his Truth Social network. The US International Development Finance Corporation will at the same time provide ins. for oil tankers in the Gulf at a “very reasonable price,” he added.

“No matter what, the United States will ensure the free flow of energy to the world,” Trump added.

Easier said than done, experts say: While the rise of crude prices stalled briefly after Trump’s announcement, it will take weeks, not days, to get tankers moving again, experts warn.

Iran’s Revolutionary Guard says it has hit 10 oil tankers transiting the Strait of Hormuz, AlArabiya reports.