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Oil supply risk shifts toward the Red Sea and Bab el-Mandeb
MUFG says about 4 million barrels per day from Saudi Arabia is shipped through the Red Sea via the East-West pipeline, raising exposure for Asian buyers if disruption hits that route.
MUFG strategist Michael Wan said disruptions linked to the Strait of Hormuz have redirected more Middle East oil flows toward the Red Sea and the Bab el-Mandeb.
Wan noted that threats involving the Houthis, along with any possible rerouting around Suez and the Cape of Good Hope, could increase transport costs, while also making the supply chain more vulnerable to regional conflict.
FXStreet reported that MUFG still expects oil prices to remain below earlier conflict highs if a resolution eventually emerges.
The analysis added that with flows increasingly reliant on the Red Sea corridor, any effective disruption to shipping there could be impactful for Asian countries dependent on Middle East oil supplies.