A fivefold increase is still not enough as the Saudi Red Sea Corridor hits its capacity ceiling
- Saudi Arabia’s crude oil exports via Yanbu Port surged to about 4 million barrels per day during the first three weeks of April, five times higher than before the Iran conflict erupted. However, from another perspective, this figure is only around 80% of Saudi Arabia's set target, indicating that the potential of this alternative route is already showing signs of exhaustion.
- As the largest single contingency solution for the oil industry to cope with a Hormuz Strait blockade, Yanbu Port’s core asset is the east-west pipeline running across Saudi Arabia. This pipeline can transfer up to 7 million barrels of crude oil per day from fields on the Persian Gulf coast to the Red Sea coast, but about 2 million barrels must be reserved for domestic use, making the physical limit for exports approximately 5 million barrels per day.
- When the actual volume of 4 million barrels still falls short of the 5 million barrel ceiling, the bottleneck preventing full capacity operation no longer lies in the pipeline itself, but rather in Yanbu Port’s loading capacity, tank turnover rate, or the connecting logistics on the Red Sea side. This means the disruptive effect of the blockade has extended beyond the Strait itself, beginning to erode the efficiency ceiling of alternative routes.
- The awkward reality of a fivefold increase still falling short of the target sends a harsh signal to the market: even if all surplus capacity of Saudi Arabia’s land pipelines is fully utilized, it still cannot singlehandedly fill the global supply gap caused by the Hormuz Strait blockade. Previous market assumptions that “Saudi Arabia’s alternative route could fully offset the risks of the Strait” are now being disproven by data.
- The next focus turns to whether Yanbu Port’s loading efficiency can climb to the full 5 million barrels per day before May, and whether the other alternative route—via UAE’s Fujairah Port, bypassing Africa—can maintain its throughput under pressure at the same time. If both critical alternate routes simultaneously reach their limits, the global oil supply will shift inescapably from a stage of “buffering for time” to a phase of “hard shortage with no further increments.”
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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