Houthi attacks are escalating and ins’ers are pulling back — can Egypt’s oil corridor absorb the difference?

Missiles and drones set fires burning at Aramco’s Jazan refinery over the weekend — the Houthis’ first shot at Saudi oil infrastructure itself rather than a tanker at sea, Türkiye Today reports. Saudi officials said there was no damage and lifted a “potential danger” warning covering Yanbu; the Houthis’ military said it struck both Jazan and Yanbu. Saudi-led coalition forces also hit Houthi military sites in the western port city of Hodeidah on Friday, in what spokesperson Turki Al Malki called a “proportionate military response” to the attacks on Saudi-linked shipping. Al Malki said Hodeidah port itself was not targeted and that Yemeni ports remain open to commercial traffic.

The market has already priced in the new risk: Leading marine war ins’ers at Lloyd’s of London told brokers Friday they would not write war-cargo cover for vessels with any “Saudi touchpoints,” including ships under other flags that have called at Saudi ports, and underwriters Ascot and Navium signaled they were preparing to cancel existing policies on some Saudi-linked tonnage, the Financial Times reported on Friday. Marsh broker Marcus Baker said Saudi Arabia risked “moving into the same bracket” as Israel, the US, and the UK, whose Red Sea cargoes already carry a war-risk premium.

Could this push more weight onto Egypt’s Sumed corridor? Saudi barrels move via Aramco’s East-West Pipeline to Yanbu, north through the Red Sea to Ain Sokhna, across Egypt through Sumed, and onto tankers at Sidi Kerir on the Mediterranean — collecting cargo at full capacity without entering the Red Sea or paying Suez tolls at all. The Suez alternative is less efficient on both counts. VLCCs cannot clear the canal fully loaded, so they offload 250k-1.1 mn bbl into Sumed before reloading at Sidi Kerir, and a tanker repositioning through Suez to load at Yanbu pays the canal’s tolls twice.

Aramco is already acting on that exposure: The Saudi company is offering additional crude cargoes from Sidi Kerir on a spot basis, supplementing its term supplies, Reuters reported on Thursday. No volumes or pricing were disclosed. The exposure explains why — around 80% of the Kingdom’s Red Sea crude exports and 48% of its Red Sea refined-product exports have passed through Bab Al Mandab since March, per Kpler data cited by Middle East Economic Survey (MEES).

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Why it matters: Yanbu is not one export option among several — with Hormuz throttled since the US-Iran war began in February, it is carrying most of the load. Yanbu handled roughly 4 mn bbl / d in June, up from about 973k bbl / d a year earlier, and accounted for 92% of Saudi seaborne crude exports that month and 78% in July, according to Kpler data. A strike that reaches Yanbu’s loading infrastructure, rather than a tanker leaving it, would hit exports at the source.

The corridor has a ceiling, and it sits at roughly half of what the Kingdom would need if Yanbu volumes rise. The East-West Pipeline pushes about 5 mn bbl / d to the Red Sea; Sumed can carry only 2.5 mn bbl / d of that north across Egypt. Deliveries to Ain Sokhna have averaged around 755k bbl / d this year, according to Mees — well under the pipeline’s ceiling for now. Storage at Ain Sokhna (18.4 mn bbl) and Sidi Kerir (19.5 mn bbl) can smooth temporary surges, but cannot raise the pipeline’s daily throughput.

REMEMBER- Egypt first emerged as a Saudi export fallback in March, when it offered the Ain Sokhna-Sidi Kerir route as a workaround for disruptions at Hormuz. The Egyptian government later opened 10 Red Sea storage facilities to international players, while Sumed continued moving Saudi crude at full capacity after attacks near Yanbu. The latest threat puts the same infrastructure to work as a bypass for Bab Al Mandab.

China is the variable that decides how much crude actually moves. Chinese buyers have kept lifting Yanbu crude at about 520k bbl / d this year, and two Chinese-owned tankers cleared Bab Al Mandab on Thursday broadcasting “China crew & owner,” the first cargoes of Saudi crude to exit the Red Sea unimpeded since the blockade, Bloomberg reported Thursday. Still, the Hong Kong-flagged New Champion, chartered by a Chinese buyer to load at Yanbu, idled in the Gulf of Aden and then U-turned on Friday, the first Chinese-linked vessel to back away. Both ships that got through had loaded before the blockade, Windward maritime analyst Michelle Bockmann told Al Jazeera, and the open question now is whether Chinese-owned tankers loading at Yanbu are allowed to pass.

The workaround adds significant time and cost to Asia-bound cargo. Routing Saudi crude north through Egypt and around the Cape of Good Hope stretches a Yanbu-Taiwan voyage from 19 days to 48, raising fuel costs from roughly USD 1.26 mn to USD 2.87 mn and adding about USD 1 mn in Suez fees, according to Reuters. A VLCC has been booked to load off Egypt’s Mediterranean coast for delivery to South Korea via the cape — the first such charter in several years — while a Greek-owned VLCC is heading north from Yanbu to transit Suez without offloading into Sumed since it is carrying a partial load. Not every owner is diverting: some Western-linked vessels have crossed the waterway or approached Yanbu with transponders switched off.