James Stephens
Crude oil prices are drawing fresh attention as United States Oil Fund (AMEX:USO) trades at 125.03 dollars, down 1.78% on the day, with fresh reporting showing Saudi Arabia's reliance on the Red Sea for crude exports has created a new vulnerability even as it solved an older one.
| Price | 125.03 USD |
|---|---|
| Day change | -2.27 (-1.78%) |
| 52-week range | 102.42 – 142.33 |
| RSI (14) | 52.33 |
| Volume | 5,059,268 |
Wood Mackenzie's vessel tracking and cargo data shows that Saudi Arabia's Yanbu terminal, which briefly became the kingdom's primary export outlet after the Iran war pushed exporters to avoid the Strait of Hormuz, has seen loadings fall sharply since March. Exports through Yanbu peaked near 4.07 million barrels per day that month, then dropped 41% to about 2.39 million barrels per day by June. That June figure also marks a 66% decline from Saudi Arabia's total export volume in January, roughly 7.96 million barrels per day across both Gulf and Red Sea terminals combined.
How Does Saudi Arabia Use the Red Sea for Oil Exports
When tensions with Iran raised fears of a blockade at Hormuz, Saudi Arabia shifted the bulk of its crude flow onto the East West pipeline, sending cargoes overland to Yanbu on the Red Sea coast rather than through the Gulf. For a stretch of months this looked like an effective workaround, letting the kingdom route oil to global buyers without threading the Hormuz chokepoint at all.
Ian Solis, a data analyst covering maritime operations at Wood Mackenzie, said the market had come to view Yanbu as a clean solution to Hormuz risk. That confidence assumed the Red Sea route itself would stay open.
Houthi Attacks Change the Calculus
That assumption came under direct pressure this week. Yemen's Houthi movement, aligned with Iran, said late Wednesday it had struck two Saudi tankers in the Bab el Mandeb strait, the narrow passage connecting the Red Sea to the Gulf of Aden. The group claimed the vessels had breached a naval blockade it had declared only days earlier, marking an escalation in the broader Middle East conflict.
Solis framed the shift bluntly: what appeared to be diversification away from Hormuz was really a move from one strategic bottleneck to another. Bab el Mandeb, like Hormuz, is a narrow strait that a hostile naval campaign could effectively choke off.
What a Red Sea Disruption Would Mean for Supply
Solis warned that sustained disruption at Bab el Mandeb could cut off a major crude artery feeding Asian buyers, given how concentrated Saudi exports have become at Yanbu. Losing that outlet, even temporarily, would force Riyadh to scramble for alternative loading points at a time when regional shipping risk is already elevated on multiple fronts.
Saudi Red Sea Exposure and Market Reaction
USO's 125.03 dollar level sits within its 52 week range of 102.42 to 142.33 dollars, with an RSI of 52.33 suggesting the fund is trading near neutral territory rather than at an extreme. The daily decline of 1.78% comes even as reports of tanker strikes near a critical Saudi export route would typically be read as bullish for crude, a reminder that oil prices reflect a mix of geopolitical risk, inventory data and broader dollar strength rather than any single headline.
Frequently Asked Questions
Can Saudi use Red Sea?
Yes. Saudi Arabia ships crude oil through its Red Sea coast, primarily via the port of Yanbu, which is connected to eastern oil fields by the East West pipeline.
Is Saudi Arabia Red Sea safe?
Safety has deteriorated recently. Houthi forces have declared a naval blockade and claimed strikes on Saudi tankers near the Bab el Mandeb strait, raising risk for vessels transiting that route.
Does Saudi Arabia have Red Sea?
Yes, Saudi Arabia has a long Red Sea coastline on its western side, opposite its Gulf coast to the east.
Does Saudi Arabia border Red Sea?
Yes. The kingdom's western border runs along the Red Sea, giving it direct access to that shipping route separate from the Persian Gulf.
Does Saudi Arabia have Red Sea ports?
Yes, Yanbu is the kingdom's main Red Sea oil export terminal, and it has taken on a much larger share of Saudi crude shipments since the Iran war prompted a shift away from Hormuz.
Edward Byrd