Analyst: Prolonged Red Sea crisis could sharply reduce crude oil transport, with anticipated alternative solutions facing reversal

1. Gregory Brew, Senior Analyst for Iran and Energy Affairs at Eurasia Group, pointed out that although Saudi crude oil can still be exported via the Red Sea, the distance to Asian markets along this route is significantly extended, causing transport costs to surge sharply. This directly provides upward momentum for international oil prices. He believes that as long as military conflict continues, oil prices remaining above $100 per barrel is highly likely. 2. Goldman Sachs analysts predicted in their research report released this week that oil prices could further rise to $120 per barrel. Meanwhile, Helima Croft, Global Head of Commodities at RBC Capital Markets, warned that if Houthi attacks do not stop, the scale of oil shipments through the Red Sea will shrink significantly, and at that point, the optimistic view that "alternative shipping routes can always be found" will be completely shattered.3. The military risk caused by the Houthis has, in fact, rendered ineffective a key buffer channel that Saudi Arabia originally used to ensure stable oil exports and thus curb the surge in global oil prices. Richard Bronze, Head of Geopolitics at Energy Aspects, an energy consultancy, explained that after the conflict broke out, Saudi Arabia urgently activated an east–west land oil pipeline, raising the daily crude oil shipments from Red Sea ports from 700,000–1 million barrels to about 4.9 million barrels, which accounts for about 5% of the global total supply; among this, roughly 3.5 million barrels per day are shipped through the Bab el-Mandeb Strait to Asian buyers.4. If the southern Bab el-Mandeb shipping route completely loses safe passage, Saudi Arabia will only have the northern route via Egypt as an alternative. However, the Suez Canal can only serve as an auxiliary channel and cannot fully replace the transport capacity of the Bab el-Mandeb Strait. Crude oil must first reach Egyptian ports and be transferred in segments due to draft limitations in the canal, then proceed westward through the Mediterranean, pass through the Strait of Gibraltar, loop around the Cape of Good Hope, and finally reach its Asian destination. This indirect route not only adds a significant amount of voyage but also markedly increases freight and insurance costs. At the same time, vessel turnaround times are lengthened and cargo delivery may be delayed by several weeks.