• Saudi Aramco (2222.SR) urgently redirects crude oil exports to its Red Sea port at Yanbu via the East-West pipeline to bypass the effectively closed Strait of Hormuz.
  • The world's largest oil exporter has notified Asian buyers, including those of Arab Light crude, to load cargoes at Yanbu, following a recent strike that stranded vessels and shut the Ras Tanura refinery.
  • Global oil trade faces severe disruption, with the Strait of Hormuz handling 38% of Saudi crude flows in 2024; closure risks spiking freight rates and tightening supply to Asia, where China imports 43.5% of its oil via the strait.

Saudi Aramco is scrambling to reroute crude shipments through its Red Sea facilities as escalating Iran-related conflict has effectively shuttered the Strait of Hormuz, according to people familiar with the matter. The energy giant, which operates with a maximum sustainable capacity of 12 million barrels per day, has activated its 5-million-barrel-a-day East-West pipeline—expandable to 7 million bpd—to divert oil straight to Yanbu, aiming to sidestep the chokepoint that stranded dozens of vessels over the weekend.

"We're working closely with buyers to ensure minimal disruption," one source said, speaking on condition of anonymity due to the sensitivity of the talks. The company has already asked Asian customers to switch loadings to Yanbu, though efforts to reach Aramco for official comment were unsuccessful. This move comes after a drone strike forced the shutdown of its giant Ras Tanura refinery, raising fears of full storage tanks and possible production cuts if exports stall.

Market jitters are palpable. On March 3, 2026, Aramco's stock rose 1.83% to 26.70 Saudi riyals, even as broader Middle East markets declined amid the turmoil. The Strait of Hormuz, which handled over one-quarter of global seaborne oil trade last year, is a critical artery for Saudi exports, with 5.5 million bpd flowing through it in 2024. Without a deal to reopen the route, the region could see initial shipments drop by 5-6 million bpd, analysts warn, though Aramco's pipeline shift offers a partial buffer with 1-2 million bpd of spare capacity.

Asian buyers are on high alert. China, India, Japan, and South Korea—which together accounted for 69% of Hormuz crude flows—face supply risks and higher costs, with Chinese refiners already cutting runs due to tightened supply. "This isn't just about rerouting; it's about securing energy security in a volatile landscape," an industry insider noted, pointing to similar precedents like the 2019 Abqaiq drone attacks that temporarily halved output. The Red Sea itself isn't without threats, as Houthi activities since 2024 have previously driven rerouting, but Yanbu already handled 18% of Aramco's seaborne exports in Q2 2024 amid those challenges.

Political tensions are flaring. Iran's closure of the strait has heightened U.S.-Iran conflicts, with the U.S. planning measures against rising oil prices, sources say. Meanwhile, Saudi Arabia's OPEC+ cuts since 2022 have already reduced flows by 1.6 million bpd, adding to the strain. In the short term, experts predict oil and LNG prices will rise significantly, with freight rates potentially spiking to $400,000 per day. Long-term, Aramco maintains expansion plans, including 300,000 bpd added capacity from Marjan in 2025, but sustained disruptions could accelerate investments in bypass infrastructure while testing global energy resilience.

Correction: An earlier version misstated the percentage of China's oil imports via the Strait of Hormuz; it is 43.5% of its 11 million bpd total in 2024, not overall imports.